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,5.i? m 

Hobson, Samuel George 











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Ilulisorv Sariiut'l (?«;0!\ti'e, 1870- 

Guild piiiiciples 111 war and peace, by S. G. Hobson ... 
with introductory essay by A. R. Orage ... London, G. Bell 
and sons ltd., U>18. 1917. 

vlil, 176 p. 18i cm. 

Reprinted from the Contemporary review, the Herald of the star 
and the New age. 

"The largest section of this book, the 'Permanent hypothesis,' is in 
part a critique of the Garton reconstruction proposals and in part an 
experiment in the application of guild principles to the immediate 
problems." — Pref. 

X Lalx)r and laboring classes— Gt. Brit. ^ Gilds— Gt. Brit. ^ 
Garton foundation, I/tndon. ^lemorandum on the industrial situation 
after the war. 4^ Reconstruction (1914-1939)— Gt. Brit, i. Orage, 
Alfred Richard, 1873- ii. Title. 

F 18—23257 

Library of Congress ^ HD8390.H78 










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"national guilds" (with A. R. orage) 

"letters to my nephew" (ANTHONY FARLEV) 














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Printed by 

Morrison & Gibh Limited 


My acknowledgments are due to the Editors of the 
Contemporary Review, the Herald of the Star, and the 
New Age, for permission to repubhsh these essays. 
Although apparently unrelated, with some consequen- 
tial redundancies, they present, I think, a reasonably 
consecutive statement of the arguments and con- 
siderations that have impelled me to advocate the 
abolition of the w^age-system and the formation of 
National Guilds. The largest section of this book, 
the " Permanent Hypothesis," is in part a critique 
of the Garton Reconstruction proposals and in part 
an experiment in the application of Guild principles to 
immediate problems. 

S. G. H. 



Introduction . 

I. The Genesis of National Guilds 
II. The Wage-System 

III. Guild Organisation . 

IV. Reconstruction 

V. The Permanent Hypothesis— 

1. The Roots of Discontent 

Vl. The Permanent Hypothesis— 

2. Quo Vadis? 

VII. The Permanent Hypothesis— 

3. The New Social Contract 

vm. The Permanent Hypothesis— 

4. Outlines . 

IX. The Permanent Hypothesis— 

5. Outlines {cotiti72ued) 

X. The Permanent Hypothesis— 

6. The Collectivist Alternative 












XI. The Permanent Hypothesis— 
7. In War 

XII. A Lecture on National Guilds 


XIII. Some Affairs of the Spirit. (An Address to the 
National Guilds League. Annual Conference, 
8th April 1917) • • • • ' ^^4 





In the following essays my colleague on the New Age, 
Mr. S. G. Hobson, has set himself to the task, among 
others, of examining the problem cf Unemployment 
with a view to proposing a solution of it. He deals, 
it will be observed, mainly, if not entirely, with what 
may be called the normal and necessary unemploy- 
ment involved in the wage-system itself. For it 
becomes obvious under his analysis that, far from 
being an occasional, vestigial, or superfluous feature 
of capitalist industry (or Production for Profit), 
Unemployment, or the existence of a reserve of Labour, 
is an essential condition of it. How much or how 
little of Unemployment or Labour in reserve may be 
necessary from time to time is determined at any 
given moment by the state of the market. When the 
market is depressed, having been, we will suppose, 
temporarily satisfied, the reserve of Labour or Un- 
employment tends to reach its maximum. When, 
on the other hand, the market is in full swing, the 
reserve of Labour tends to fall to a minimum. Never, 



however, under normal circumstances does this mini- 
mum disappear into nothingness ; nor, since Un- 
employment is a function of capitalist industry, can 
it be made to do so. Much or Httle, a maximum or a 
minimum reserve or stock of Labour on hand, capitalist 
industry requires Unemployment as certainly as it 
requires Employment. 

But if Mr. Hobson is correct in concluding that this 
is the case, and Unemployment is in reahty an indis- 
pensable function of modern industry, the question 
must be raised whether the cost of maintaining the 
function should not in justice fall upon those in whose 
interest it is discharged. For many years, as we 
know, the main cost of Unemployment was made to 
fall upon the Trade Unions whose economic function, 
indeed, was primarily that of maintaining this reserve. 
Later, however, the State itself came to the support 
of the Trade Unions, though in such a manner that in 
effect its maintenance wasconfined to the unemployable. 
And, later still, by means of Part II. of the Insurance 
Act, the Employers proper were brought into responsi- 
bility as regards selected trades, by being required to 
contribute to a fund composed of sums drawn from 
the State, the workman, and themselves in roughly 
equal amounts, out of which the reserve of Labour in 
the scheduled trades might be maintained. What is 
here contended, however, is that this division of the 
cost of maintaining the unemployed, though fair in 
appearance, is in fact more plausible than just. Pre- 
cisely in so far as a reserve of Labour is necessary to 
any industry, provision for its maintenance should, 
it is claimed, be made by the industry and by the 
industry alone. The State, it is plain, has only an 


indirect interest in maintaining the unemployed — the 
indirect interest, namely, of safeguarding order. 
The Trade Unions, likewise, have an interest secondary 
to that of the industry itself, since their only object in 
undertaking the support of their unemployed is the 
maintenance of their own Union. Only the Employers, 
therefore, have a direct interest in the matter ; and 
one which, besides being essential, is comparable to 
other of their functions. In what way, for instance — 
sentiment apart — does either the necessity or the 
obligation to maintain a reserve of Labour differ from 
the admitted necessity and obhgation of the employer 
to maintain his reserves of mechanical power, horse- 
power, or raw materials ? In none of these instances 
does he expect the State or other corporations to assist 
him in bearing the cost of maintaining a reserve, — 
why, then, should he expect the cost of his Labour- 
reserve to be borne by others ? The reply, of course, 
is that it is due partly to custom and partly to the 
circumstance that in fact the employer is able to 
throw the cost of his Labour-reserve upon others. 
But not only is his right to do even what he can here 
challenged, but proposals are made for instantly 
laying upon his shoulders a burden which was always 
properly his own, but which hitherto he has shifted 
to the shoulders of the State and the Trade Unions. 
In short, Mr. Hobson' s suggestion is that in future 
every industry shall bear its own burden of Labour- 
reserve, without the aid of either the State or the Trade 

Both the foregoing problem and the foregoing 
solution are, however, to be distinguished from the 
particular problem and the correspondingly particular 




solutions which must be presented and offered for the 
unemployment caused by the war. A certain amount 
of unemployment, varying between a maximum seldom 
exceeding lo per cent, and a minimum seldom falling 
below 4 per cent, is, we have seen, a permanent 
necessity of modem industry ; and it constitutes, 
therefore, a normal problem to which the normal 
solution proposed by Mr. Hobson may very well apply. 
But the unemployment which it is inevitable that the 
war will leave in its trail is so far from being normal 
in character or susceptible of normal solutions that, 
like the war itself, it should be regarded as a lusus 
naturae, a unique phenomenon. It is true, of course, 
that intelligence would still suggest that in dealing 
with a unique phenomenon we should have regard to 
normal circumstances. As the world is not always at 
war, and they are wisest who conduct war as if peace 
would one day return, so also the conditions of un- 
employment that will prevail after the war will not 
prevail for ever, and they would be wisest who deal 
with it without prejudice to the normal conditions 
that will ultimately be restored. At the same time, 
it is no use bhnking our eyes to the facts that the 
after-war problem of unemployment is unique, that 
the solution for chronic and normal unemployment is 
inapplicable to it, and that the best we can hope from 
it is a solution which, while offering no permanent 
remedy for the normal condition of unemployment, 
does not prejudice such a remedy, but, on the con- 
trary, as far as possible facilitates its more speedy 
application. In a word, the best we can hope for of 
any solution of the special problem of war-unemploy- 
ment is the reduction of the swelling to its normal 

dimensions, and, without prejudice to the remedy 
proposed by Mr. Hobson for the radical and chronic 

In order to arrive at an appreciation, however, of 
the character of the special problem that will be 
presented to us, it is necessary to review briefly the 
means by which the problem itself has been created. 
In general it may be said that what we have had to 
do during the progress of the war is to actualise an 
enormous amount of Labour which hitherto has been 
only potential. But this transformation is itself an 
economic change of considerable importance ; for 
the differentiation of merely potential from actual 
Labour-power is the differentiation of Labour normally 
not upon the market from Labour actually upon the 
market. It is clear, in fact, that as a result of the 
war we have made marketable a quantity of Labour, 
running into millions of units, which hitherto was 
unmarketable or only potentially marketable. And it 
is no less clear, on reflection, that the transformation 
backwards — the restoration, that is, of actual Labour 
to its pre-war state of potentiality simply — is likely 
to be difficult, if not impossible. 

The transformation, it will be observed, has been 
brought about by various means. In the first place, 
it has been brought about by the addition to the 
Labour-market of hundreds of thousands of people 
who, under ordinary circumstances, would never have 
been in the actual Labour-market at all, though always, 
of course, constituting its potential source of supply. 
Next it has been assisted to a degree beyond calcula- 
tion by the removal of the restrictions that have 
hitherto confined skilled work to skilled men ; by 




the conversion, in short, of merely potential skill into 
actual skill. Finally, it has been intensified by the 
use that has been made of labour-saving machinery, 
methods of organisation, hours of labour, and similar 
devices for increasing, by economy, the actual Supply 
of Labour. And all these modes of converting potential 
into actual Labour have had the effect, in terms of 
economics, of creating a Supply of Labour and of 
enlarging it beyond anything that was ever con- 
templated as possible under normal circumstances. 

The question must now be asked, What is to be 
done with this specially created Supply of Labour 
when the war, that called it into marketable being, is 
over ? There are several possible replies which must 
briefly be examined. 

The first reply is virtually to assume that the 
problem will solve itself under circumstances similar 
to the circumstances that produced it. We may 
expect, so runs the case, that precisely as the special 
needs of the war called from potential into actual 
existence so many thousand or milUon labour-units, 
as many units will return voluntarily to their potential 
condition when the special demand for their services 
has passed away. They danced, in fact, when the 
war piped ; and they will cease to dance when the 
war pipes no longer. But this pleasing hypothesis of 
a self-adjusting problem takes no account of the pro- 
fundity of the change involved in the transformation 
that has actually taken place. If it were, indeed, 
only a question of returning to stock mere commodities 
without any will of their own, we might entertain the 
hope that as soon as the special demand for Labour 
which the war has created had passed away, the special 

supply would likewise cease to offer itself, and take 
itself off the Labour-market to the easy relief of the 
congestion that must otherwise threaten it. But, in 
fact, the commodity of Labour differs from other 
commodities in being inseparable from the psychology 
of human beings in general. Labour, in short, is 
both a commodity and a human being. It follows, 
therefore, that in considering how the special war- 
supply of Labour is to be disposed of after the war, 
the human elements of which it is partially composed 
must be allowed for as well as the factor of Labour- 
power itself. The reconversion of actual back to 
potential Labour, as has already been said, is not so 
easy as the conversion itself ; and how difficult the 
conversion has been the legislation of the war bears 
witness. But when, in addition, the process of re- 
conversion is likely to be opposed both by the actual 
Labour itself and by considerable sections of public 
and capitalist opinion, the chances of its natural trans- 
formation, without rational direction, are small. We 
must conclude, in fact, that under no conceivable 
circumstances will the present actual Supply of Labour 
resume its former dimensions without special effort 
on the part of society and the State — efforts, moreover, 
as great as, if not much greater than, the efforts that 
were required to enlarge it to its present size. 

A second reply, no less optimistic but no less specu- 
lative, is as follows : that great as may now have 
become, in consequence of the war, the actual supply 
of marketable Labour, the demands of Peace will equal 
it. In other words, owing to the ravages of the war, 
the arrears of necessary work, the accumulated 
appetites of various markets, and the fresh energy 



of production, the demand for Labour, even when the 
special demands of the war have ceased, will absorb 
the present supply, including so much of the specially 
created supply as does not at once relapse into 
potentiality and disappear from the Labour-market. 
Nobody, of course, can prophesy with certainty ; and 
it would be unwise to deny that either the foregoing 
or the earlier answer to our question of what is to be 
done with the war-labour after the war may possibly 
prove correct. Conceivably, that is to say, either 
the special problem of the specially created Labour- 
supply will solve itself by the voluntary withdrawal 
from the market of all those units which have been 
brought in by the war, or demand in peaceful spheres 
will spring up as fast as it dies in the area of war and 
absorb the Labour as effectively as the war has em- 
ployed it. Both, we repeat, are conceivable ; but 
neither, we must say, seems reasonable. For, in 
regard to the second reply, we may observe that War 
is a customer of such an appetite that the resources 
not only of Labour at home, but of Labour in all parts 
of the world, have been needed to keep it satisfied. 
Where is there any sign of an industry springing up 
immediately upon the heels of war, capable of an 
effective demand, in this country alone, of live milhons 
sterling a day ? Moreover, it is not altogether the 
case that the destruction caused by the war will of 
itself create an effective demand for commodities 
corresponding to the losses sustained. Demand, in the 
sense of want and need, there will surely enough be in 
every country that has passed through the fever and 
inflammation of the war ; but effective demand in the 
market sense— demand, that is, bearing money in its 


hand — is certain in every war-stricken country to be 
for several years less than it was before the war. 
Under these circumstances, with the best will in the 
world for production, and with every intention of 
employing every unit of Labour that has found em- 
ployment during the war, we cannot expect that any- 
thing like all those imits will, in fact, find employment ; 
but, on the contrary, we must expect a volume of 
unemployment as much larger than the normal by 
the amount by which the normal Supply of Labour 
has been increased. 

This being, as far as can be seen, the inevitable 
outcome of leaving the problem to solve itself, or to be 
solved by the mere hope that the demands of peace 
will instantly equal and remain equal to the demands 
of war, it becomes advisable to consider some special 
measures for reducing the abnormal swelling of the 
Supply of Labour. And we have, in this method of 
approach to the problem, the advantage of reason 
over chance, the calculable over the incalculable, and 
the certain in place of the uncertain and speculative. 
On the face of it, indeed, the problem, properly ap- 
proached, affords us an unparalleled opportunity not, 
perhaps, for the solution of the chronic problem of the 
reserve of Labour (to which Mr. Hobson's more drastic 
remedies are applicable), but for the scientific and 
rational classification of our national Labour-power 
according to the degree and kind of its economic 
utiHty. Consider, for example, how much easier the 
problem of mobilising our Labour-resources would 
have been had there existed, when the war broke out, a 
complete classification of Labour-ability by grade and 
by potentiality. All that would then have been 





necessary as the demands of the war increased would 
have been to call into the Labour-market, grade by 
grade, the reserves, first actual and then potential, 
and to allot to each of them a function in industry 
corresponding to their ability. In place of the chaos 
with its enormous extravagance that prevailed, we 
might have had comparative order with comparative 
economy. And it will be a blunder of the first magni- 
tude if, now that the opportunity of making such a 
classification at our leisure is presented to us, we do 
not ensure ourselves against the repetition of our 
proven mistakes and neglects. What is it that we 
are suggesting ? It is that we should select from the 
inevitable surplus of Labour that will result from the 
war, the amount and kind of Labour to put back into 
our reserves. Not leaving the selection to chance, we 
ought deliberately to determine and define, in advance 
of the actual circumstances, the classes and quantities 
of Labour which, on the return of peace, must be taken 
out of the Labour-market and restored to its pre-war 
state of simple potentiaUty. 

Nor is the criterion for such a selection by any means 
as difhcult to discover as it might at first sight appear. 
It must, in the first place, be economic — having regard, 
that is, to the relative utilities in actual industry of 
the Labour in question. And, in the second place, it 
must be humane — in other words, the selection must 
commend itself to the sentiments of common humanity. 
With these two principles to guide us, it should not be 
impossible or even difficult to solve our special problem 
of war-unemployment, not only on its own account 
but with advantages to society in general, the magni- 
tude of which might almost compensate us for the 

cost of the war. Let us now consider the method 
in a little more detail. 

There is a phrase of which we may make use which, 
in a broad way, expresses the general idea we have in 
mind. It is the " un-dilution of Labour," or, if you 
prefer it, the re-concentration of Labour. Familiar 
as we have become with the meaning of the phrase, 
" the dilution of Labour." the undilution of Labour 
may be said to convey the idea of the reversal of that 
process, or the elimination from the actual Labour- 
market of the elements with which, in response to the 
demands of the war, it was diluted. The question 
now presents itself, therefore, in this form : In view of 
the two considerations above referred to, namely, 
the economic and the humane, what elements existing 
actually in Labour at this moment would it be wise 
to draw off from the Labour-market and to place 
into reserve, as soon as the war has come to an end ? 
By what subtractions from actual Labour, in short, 
shall the undilution we are in need of be brought 
about ? No general answer is possible, and we should 
be unwise to seek it ; but by whittling away, as it 
were, at the problem an answer is surely to be dis- 
covered. Let us approach it from each end to begin 
with. First, it would appear to be both rational and 
humane if that section of Labour represented by the 
aged or comparatively aged workers were definitely 
withdrawn from the Labour-market, by means of a 
considerable lowering of the age for the receipt of 
an old-age pension. At seventy, which is now the 
statutory age for the retirement of the working classes, 
men are not only economically of positively small 
value, but in a variety of ways they cost industry a 





> i 

great deal more than their contribution. For the 
army of industry, Uke the military army, can travel 
no faster than its slowest arm. We should, therefore, 
propose, for the relief of industry, for the relief of the 
Labour-market, and for the rehef of the working 
classes themselves, the lowering of the age for retire- 
ment from seventy to sixty, together with the raising 
of the pension-allowance from five to fifteen shillings 
for a single person and from ten shillings to twenty- 
five for a married couple. Next, and at the other 
end of the scale of Labour, it is desirable upon every 
ground, civic, economic, and humane, that the statutory 
age for the admission of young people into industry 
should be raised from fourteen to eighteen. The waste 
involved in the premature employment of boys and 
girls is colossal. Nor only is their actual value in 
industry comparatively soon exhausted, leaving them 
slaves of routine and of little more utility than 
mechanical tools of a simple type, but their value 
forgone, their potential value which might, under 
proper treatment, have become actual, is lost together 
with the joy of their youth. Every consideration 
that reason can bring to bear upon the problem before 
us dictates the instant restoration to our reserves of 
the Labour now employed between the ages of fourteen 
and eighteen. 

Another means of approach to our problem of reduc- 
ing the abnormal swelling which the Supply of Labour 
has undergone, is the restoration or the institution 
in industries generally of the reduced working-day. 
Experiences gathered during the war have proved 
unmistakably that, even when every motive of 
patriotism and profit has been concentrated upon the 

will of the worker, his proper economy of working 
consists rather in reducing than in increasing his hours 
of daily labour. And if this has been shown to be the 
case when the circumstances are the most favourable 
to long hours that can be imagined, how much more 
must it be the case when the circumstances are as 
unfavourable as they will become when these special 
motives are no longer operative. Not only, indeed, 
would a shorter working hour appear to be indicated 
as a true economy, both for the moment and for the 
future, but we would even urge the economy of more 
frequent and longer periods of rest or of holiday. 
Were it not the fact that the exertions made during 
the war will infallibly require (as they also deserve) 
a period of comparative rest to follow them, if the 
nation, in its weakest parts, is not to become per- 
manently invalid, it would still be wise, in view of all 
we have said, and of our special problem in particular, 
to institute more holidays for the working classes, if 
only as an economic means of reducing the actual 
Supply of Labour to its probable demand. 

Finally, it must be admitted that when all these 
measures have been taken, when Labour over sixty 
and under eighteen has been removed from the Labour- 
market, and when the Supply of Labour has been still 
further restricted by the institution of shorter working 
hours and of longer holidays, there will still remain (so 
enormous has become our actual Labour-power) a 
Supply of Labour in excess of any permanent com- 
mercial demand that can at present be foreseen. Still 
further to reduce our Supply and to bring it more 
exactly within the compass of the probable Demand, 
we suggest, therefore, in addition to the foregoing 




measures, the institution of State or national service 
of an economic character : works, that is to say, of 
pubHc utility and designed to carry out the exploita- 
tion of our natural resources on a scale beyond the 
means, but not beyond the needs, of ordinary industry. 
Consider, for example, the opportunity presented by 
the demobilisation of the troops for their re-enlistment 
and immediate re-employment in works, perhaps more 
congenial to them than war, such, for instance, as the 
re-afforestation of these islands, the restoration of our 
water-ways, the rebuilding of our villages and city 
slums, the organisation of mechanical distribution — 
works, every one of them, as economically valuable 
as they are certain, if left to private enterprise, to be 
neglected. Is it impossible that the self-same State 
that has known how to employ on national preserva- 
tion four or five million men cannot find employment 
on national well-being for a million if need be ? By 
some such action, calculated, as it is, to draw off from 
the swollen Labour Supply left by the war a consider- 
able part, and, in conjunction with the other measures 
already enumerated, our particular j)roblem would, 
at any rate, be solved ; and we should have solved it 
by orderly, rational, and economic means such as would 
bring us, as a nation, both credit and profit. 

Thereafter the problem of fimctional unemploy- 
ment, as defined and considered in the following essays, 
would become susceptible of the method of treatment 
suggested by my colleague, the author of them. In 
a double sense, therefore, this present essay is an 



The Genesis of National Guilds 

If, in the months before the war, our statesmen were 
anxious and preoccupied, so also were our industrial 
leaders. The Labour World was in eruption, boding 
ill for future industrial peace. The strikes of 1913 
and 1914 — the miners, the railway and the transport 
workers— presented new and perplexing aspects. For 
not only did they mark a reversion from the political 
methods that had prevailed for a decade, but they 
showed a larger cohesion and a wider view of the 
ultimate purpose of unified organisation. Nor is it 
without significance that these strikes were followed 
by the triple alliance between the three unions con- 
cerned. The national unity induced by the war has 
obscured these industrial issues ; they still smoulder 
under the surface. Schemes of reconstruction that 
ignore this fact are doomed to disillusion. 

To appreciate the situation in 19 14, it is necessary 
to glance back over the preceding years. In the late 
'eighties and early 'nineties, the Trades Union Con- 
gress was a respectable and highly conservative body, 
composed almost exclusively of skilled workmen! 
It was content to maintain the status quo as between 
itself and the employers ; it seemed equally content 




to let the unskilled workers fight their own battle in 
their own way. Its leaders, of whom Mr. Broadhurst, 
M.P., and Mr. Pickard, M.P., were the most powerful 
and representative, were in their small way prosper- 
ous and content, anxious not to be disturbed in their 
little kingdom. Three events rudely shattered their 
quietude : the Dock Strike, which called into industrial 
and political consciousness a large army of unskilled 
workers ; the Taff Vale judgment, which upset the 
basis of Trade Union organisation ; the advent of the 
Independent Labour Party, which spread rapidly 
through Yorkshire and Lancashire, and speedily 
transformed the ideas and purposes of a large section 
of the skilled trade-unionists. The dock strike com- 
pelled the Trade Union Congress to take under its wing 
the unions of unskilled labourers that had sprung into 
existence as an outcome of the strike. 

This was but the culmination of the economic develop- 
ment of automatic machinery, which had given to a 
host of unskilled workers a footing in industry not easily 
to be distinguished from their skilled brethren. Cer- 
tainly the engineers had learnt their lesson, the Pallion 
forge dispute, so disastrous and exhausting, being 
fresh in their memory. But the real upheaval came 
in the combined effects of the Taff Vale judgment and 
the Socialist propaganda. The Socialists, particularly 
the Independent Labour Party, urged from a thousand 
platforms that the strike was an effete weapon ; that 
organised labour must exert its political power to 
achieve its objects. " Not the strike but the ballot ! " 
In this way, Labour plunged into its pohtical adven- 
ture. Whilst the strike was, in fact, never abandoned 
and occasionally resorted to, the nervous energy of 



Labour was spent upon politics. It was sincerely 
believed that Parliament, in its majesty, would give 
to the wage-earner what he had failed to obtain by 
union negotiations or by strikes. 

The arrival in the 1906 Parliament of a phalanx of 
forty Labour members, independent in form, if not in 
fact, of the " orthodox " party whips, seemed a por- 
tent, and was regarded with an unquiet sense of fore- 
boding by many " old Parliamentary hands." For 
the first session or two, the new party got very much 
what it demanded. Indeed, it is probable that, had 
it put its claims higher, they would have been conceded. 
In all the industrial constituencies of England and 
Scotland there was an ominous ferment not lightly 
to be disregarded by politicians, whose first thought 
is the security of their seats. It really seemed as 
though a new landmark had been reached in our 
pohtical history. But apart from the fact that the 
new party had been badly led, no political leader of 
genius or even of ordinary competence having been 
evolved, industrial developments were only too swiftly 
proving that economic power inevitably shapes and 
moulds political power. 

Feeble though the Labour Party had proved itself 
to be in political acumen, singularly lacking though 
it was in courage (the greatest quality in politics), 
the fatal criticism had finally to be levelled against 
it that even as it sat in ParHament, acquiring 
Parliamentary habits, as though fey to the soil, 
profits were mounting by leaps and bounds, and the 
purchasing capacity of wages was shrinking. The 
Board of Trade Report on Wages, issued in 1913, may 
be said to mark the decline of the political Labour 



Party. This report disclosed the precise incidence of 
the prosperous period, 1906-1910. Nominally, wages 
in those years rose 6 per cent., but real wages showed 
a decline of 10 per cent. In the Labour constituencies, 
combined rent and retail prices rose from 10 per cent, 
in Barrow, Dundee, and Glasgow, to 16 per cent, in 
Blackburn, Bolton, and Stockport. (Incidentally, it 
is worth noting that whilst rents increased iS per 
cent., prices advanced 137 per cent.) It had become 
painfully clear that political action, from the wage- 
earner's point of view, was a failure, or worse. 

Economists are agreed that wages is the price paid for 
labour as a commodity. I do not think that amongst 
pohtical economists there is a single dissentient 
voice to that proposition. The human side of labour 
may in our social hfe call for sympathetic considera- 
tion ; in the strict economic sense it is a commodity, 
the value of which fluctuates with demand and supply. 
From this conclusion there is no escape, for rent, 
interest, and profits can only be paid on the margin 
secured by the entrepreneur, who buys labour for x, 
and sells it in its congealed form for x-{-y. That is 
the foundation of our existing social and industrial 

It was not always so. If we examine old bills 
and accounts of the mediaeval period, it is interest- 
ing and suggestive to observe that the wage-bill was 
always rendered as distinct, and without addition to 
the contractor's total account. He made his profit 
(if it could be so called) out of the materials plus his 
own labour. I have never seen any moral comments 
upon the point, but I am inclined to the view that to 
have made a profit, at least in that barefaced way, 



would have been regarded as dishonest. It is, how- 
ever, a distinction without much practical difference, 
for wages, then as now, were based upon the cost of 
subsistence. But the difference at least had this 
significance : it separated and distinguished the 
human element from the non-human commodities 
for which the lord of the manor ultimately paid. 
In these days, when pure economics tends to be 
submerged in a rather inchoate sociology, the strict 
economic meaning of wages is apt to be obscured. The 
sociologist thinks of the man, with small satisfaction 
to himself or his argument ; the economist thinks of the 
labour. It puzzled Marshall, who sometimes takes a 
wider view than his subject strictly warrants : 

" The next of those characteristics of the action of 
demand and supply peculiar to labour, which w^e have 
to study, lies in the fact that, when a person sells his 
services, he has to present himself where they are 
delivered. It matters nothing to the seller of bricks 
whether they are to be used in building a palace or a 
sewer ; but it matters a great deal to the seller of 
labour, who undertakes to perform a task of given 
difficulty, whether or no the place in which it is to be 
done is a wholesome and a pleasant one, and whether 
or not his associates will be such as he cares to have. 
In those yearly hirelings which still remain in some 
parts of England, the labourer inquires what sort of a 
temper his new employer has, quite as carefully as what 
rate of wages he pays." 

Marshall's point bears, in part, upon the problem of 
the mobihty of labour, but it also asks the really vital 
question, how far we can distinguish the man from his 






labour. As stated, it may seem remote from practical 
affairs ; it is, in fact, highly pertinent, for it raises the 
living issue of Labour's status. Because the worker 
must go and be where his labour is sold, because his 
labour is all that he possesses, how far is he removed, 
in his life and person, from the economic valuation of 
his labour as a commodity ? But, strictly considered, 
the fundamental fact, common to every kind of wage, 
is the absolute sale of the labour commodity, which 
thereby passes from the seller to the buyer, and be- 
comes the buyer's exclusive property. This absolute 
sale conveys to the buyer absolute possession and 
control of the products of the purchased labour, and 
stops the seller of the labour commodity from any 
claim upon the surplus value created, or any claim 
upon the conduct of the industry. The wage-earner's 
one function is to supply labour power at the market 
price. That once accomplished, he is economically of 
no further consideration. 

The National Guildsman's answer is, sans phrase, 
to throw the labour commodity theory into the discard. 
He contends that labour is something more than a 
commodity, because the human element enters into 
it ; that it is, in fact, a " dominant," if I may detach 
a Mendelian term ; that any scheme of values, any 
tableau econornique, based on that theory, cannot 
stand the modern analysis, and must sooner or later 
fall to pieces. We are in good company. In a recent 
letter to the Times, that distinguished lawyer, Lord 
Wrenbury, also rejects the theory. Noting the want 
of harmony between Capital and Labour (he has 
previously argued that the labourer, in his own way, 
is a capitaHst) and seeking for the explanation, he 

remarks : " Principally because while both employer 
and employed contribute to production, the thing 
produced belongs to the employer to the exclusion of 
the employed. This fact lies at the root of all in- 
dustrial discontent." His conclusion is that " that 
man will have solved the problem who finds the way 
to give the employed upon commercial principles a 
share and interest in the thing produced." 

The logic of this pronouncement carries us a stage 
beyond profit-sharing ; it involves partnership. Profit- 
sharing is to reap a profit on the purchase and sale of 
the labour commodity and its products, and then to 
distribute some part of it amongst the employees. 
It certainly does not postulate " a share and interest 
in the thing produced." If I have a share and interest 
in the productions of some company or firm, I am 
undoubtedly, in some degree, a partner. I do not, 
of course, wish to strain Lord Wrenbury' s meaning. 
I gather that he does, in fact, favour some form of 
profit-sharing, but undoubtedly the definite concession 
of a share and interest to Labour constitutes a 
partnership. In my opinion, it is a partnership that 
is inevitable. 

Lord Wrenbury, if he can carry the capitalist forces 
with him, has inscribed a new charter of labour. I 
hope he will not be shocked when I tell him that, so 
far as he goes, he is in harmony with that new school 
of economic thought which finds expression in a call 
for National Guilds. The practical question arises, 
however, how to crystallise his dictum into action. 
It cannot be a partnership as between the employers 
and the individual employees, for that way lies stagna- 
tion. The employees, having secured " their share and 



interest in the thing produced," would become a Httle 
close corporation. Having regard to the fluctuations 
of employment, " the mobihty of labour," the partner- 
ship must be between the em|)loyers and some repre- 
sentative body of the employees — the trade-union, 
in short. And why not ? The trade-unions cannot 
remain in their present indeterminate position. Either 
they must be destroyed or brought into closer organic 
relations with industry. I may remind employers 
that all previous attempts to smash the unions have 
failed. They cannot be destroyed ; they are too deeply 
rooted in our industrial life. Lord Wrenbury could 
do no greater service than to draw up a treaty of 
industrial peace between organised capital and 
organised labour, conferring upon labour that " share 
and interest in the thing produced," which he recog- 
nises to be at the root of all industrial discontent. I 
would merely venture to warn him that we have 
intellectually travelled beyond that system of arbi- 
trarily supplementing wages known as profit-sharing ; 
that, in any event, it is incompatible with the 
existing industrial system. The logic of his argu- 
ment leads to partnership ; so also does the logic of 


If, then, we look beyond the dislocations of war, 
and have regard only for those industrial conditions 
that persist, two new factors emerge : the imperative 
need for a change in the wage-earner's status : and a 
definite recognition of partnership. The first is, of 
course, involved in the second. But more also ; for 
the spiritual and psychological results flowing from a 
new and higher status of the wage-earners would, I 
trust, finally remove all fears that the servile state is 



upon us. It is, however, when we come to discuss 
partnership that our troubles begin. 

Hitherto, I have referred only to the manual 
labourers, using the word Labour in its generally 
accepted sense. We must not, however, disregard 
the claims of the middle and lower-middle sections 
of the commimity — the brain workers, as they prefer 
to be called. They, in their own way, contribute to 
the production and distribution of wealth. Yet, 
indeterminate though the position of the trade-unions 
undoubtedly is, how much more indeterminate is 
that vast mass of industrial and commercial society, 
the " salariat," daily and hourly engaged in a struggle 
to which the gloomy pen of George Gissing did but 
faint justice ? The manual worker, hardened by 
spells of unemplovment, by strikes and lock-outs, by 
ever-recurring changes in the methods and channels of 
production, has acquired a certain cheerful stoicism ; 
but who, as yet, has plumbed the miseries, the carking 
cares and fears, the thwarted petty ambitions of the 
underpaid clerk, the foreman, the under-manager, 
the small tradesman, the commission agent, the hard- 
driven commercial traveller ? Even if their struggle 
be mainly directed to the maintenance of a certain 
respectability, however shabby, and motived by a 
rooted determination not to descend into the ranks of 
the wage-earners, shall we be the less sympathetic on 
that account ? I do not doubt that economic pressure 
must ultimately squeeze out of existence a number of 
non-economic middle-class occupations (every type 
and grade of " tout," for example), but when all 
allowance has been made, this fact remains indis- 
putable : the middle and lower classes contribute their 

1 1 





share to the work of the nation and cannot, therefore, 
be equitably cxchided from a " share and interest in 
the thing produced." Or, put in other words, the 
sa lariat and labour are equally interested in the 
organisation of industry and the form of remuneration 
to be adopted. 

If the middle classes were as easily classified as 
the proletariat, our task would be relatively simple. 
But the diihculty is that, regarded statistically, the 
great majority are nondescript. Nor has it escaped 
the attention of the capitalist leaders that their policy 
is to divide the middle classes and conquer. This is 
done by attaching the managerial elements, and by 
grading every kind of administrative post, however 
lowly, as higher in esteem than manual work. Never- 
theless, when the lure of social superiority has played 
its part to the utmost, the middle-class residue remains 
unsatisfied, its claims are substantially rejected, 
gradually yet certainly it approximates in sympathy 
and purpose to the proletariat. The railway clerks 
are a case in point. They are now actively associated 
with the Railwaymen's Union. And there is a clerks' 
trade-union already in existence. The '* residue " is, I 
suspect, the majority. 

Now, assuming that organised labour has won its 
way through to some form of partnership (unorganised 
labour could never do it), it follows, I think, that a 
totally new relation is established between the manage- 
ment and the manual producers. No doubt one can 
foresee endless friction and irritation. Nevertheless, 
fimdamen tally, a greater and more enduring harmony 
is established. The friction we foresee is not the old- 
rooted antagonism, the veritable class-struggle, but 

rather the jolts inherent in the new procedure as the 
various parties to the new social contract are dis- 
covering and delimiting their new functions. I some- 
times wonder whether the camaraderie of the trenches 
may not prove to be a considerable factor in estab- 
lishing the new order with greater good-will, in a 
more accommodating spirit, than would have been 
possible under pre-war conditions. 

It has been necessary to pass in review the existing 
social and industrial factors before I could even hint 
at or approach any suggestion of a new formation 
which would embrace the new economic conditions. 
From the workers' point of view, the object to be 
achieved is finally to secure themselves against any 
reversion to the commodity basis of the valuation of 
their labour. That valuation primarily comes from a 
more or less fatalistic acceptance of the law of supply 
and demand. If the price of labour— wages— is to 
be governed for ever by this unseen god, there is no 
redress, no change of status. A hopeless and unchanging 
servitude stares the worker in the face. And the 
price of labour must continue to be governed by the 
maintenance of a reserve of employment, quite errone- 
ously known as the unemployed. But if partnership 
is to be accepted, it is evident that unemployment 
cannot nuUify it, for unemployment is not permanent 
to the person. It may or may not be a permanent 
condition. No one worker is always unemployed. 
If he were, he ceases to be a worker ; his case calls 
for pathological investigation. Again, let it be em- 
phasised, a shortage of work, at any given moment, 
must not invalidate partnership. 

The treatment of our unemployed is the blackest page 



in our industrial history. We went wrong when we per- 
mitted the employers to throw upon the community the 
mamtenance of their reserves of employment. Econo- 
mically it may be stated thus : Only the bare cost of 
the labour commodity actually delivered enters into the 
cost of the finished product. The cost of the reserves 
of the labour commodity is a social charge. It surely 
is now evident that the cost of reserve labour should 
have been included in the cost of the finished product. 
The cost of the one is vitally dependent upon the cost 
of the other. This is no revolutionarv theory. So 
conservative a writer as Mr. Binney Dibblee in his 
valuable work, The Laws of Supply and Demand is 
emphatic that each trade should have borne the cost 
of its own unemployed. 

It now becomes evident that if the industrial world 
IS to be recognised on the basis of partnership " in 
the thing produced," the new formation must compre- 
hend all the industrial workers from management to 
apprenticeship and industry by industry. The organisa- 
tion cannot be local because industry has long since 
ceased to be local; it cannot be sectional, because 
all sections necessarily dovetail into each other. It 
must be strong enough to provide for all its parts and 
members, those working and those in reserve. In 
short, it must be national ; nothing less restricted will 
suffice. We have to discover what are our national 
industries, main and ancillary, and constitute national 
organisations to correspond. Management and labour 
must join hands ; harmony must be evolved out of 
existing chaos. These proposed large industrial 
organisations are what we would call "National 
Guilds." A National Guild is the combination of all 



the labour of every kind, administrative, executive, 
and productive, in any particular industry. It 
includes those who work with their brains and those 
who contribute labour power. Administrators, 
chemists, skilled and unskilled labour— everybody 
who can work— are all entitled to membership. Nu- 
merically considered, the trade-unions must form the 
bases of these National Guilds; but they, in their 
turn , must merge into the greater body. 

It is, of course, evident that such an organisation 
would have a complete monopoly of its labour power. 
Possessing that monopoly, the commodity valuation of 
labour would go by the board, and with it the wage- 
system. We hear a good deal, in these later days, of 
the " abolition of the wage-system." We are too apt to 
ignore the real purport of the phrase. The average 
man dismisses it lightly : " What does it matter what 
you call it— wages, or pay, or salary ? The important 
thing is, what do you bring home on Saturday, or 
whatever is pay-day ? " But you cannot so cavalierly 
dismiss a phrase that shows such tenacity. The 
workman is not a fool ; he thinks out his position in 
his own way and from his own standpoint. When he 
speaks of wage abolition, he means the abolition of 
the commodity valuation. If wages be the price paid 
for the commodity labour, then he does not want to 
sell his labour as a commodity, and consequently he 
does not want wages. On the contrary, he wants his 
pay or remuneration to be based on his personality. 
He wants his economic claim upon the community to 
be admitted as something human and not non-human. 
I venture the opinion that the recognition of this fact 
by capitaUsts and employers is the beginning of 

f I 


wisdom. In any event, protests against the exist- 
ing wage-system increase in volume, whilst the move- 
ment (partly conscious, largely unconscious) towards 
National Guilds, through a larger unionism, develops 
strength with significant speed. Here, for example, 
is a resolution recently passed at a meeting of Leeds 
engineers : 

" That reahsing that as at present organised the 
Trade Union movement is entirely inadequate, this 
conference of the rank and file demands that the 
executives of all unions catering for engineering 
and shipbuilding workers immediately get together 
and formulate a practicable scheme of amalgamation 
that shall fuse all sectional unions into one industrial 
union, having as its object the organisation of all 
workers in the industry, regardless of craft or sex ; 
and as its ultimate aim, the control of industry for 
the complete aboHtion of the wage-system." 

I may perhaps add that I have no personal know- 
ledge of the circumstances. I merely quote from a 
weekly Labour paper. 

And now, what has the statesman to say to all 
this ? Faced with an industrial revolution, is the 
State to stand by, passive, inert? Are these great 
producing and distributing Guilds to be permitted, 
unchecked, to hold up the State, and incidentally the 
consumer ? That would indeed be the apotheosis of 
Syndicalism. Evidently we must inquire into the 
relation of the State to industry. 

It may now, I think, be confidently asserted that 
the collectivist solution has proved a delusion. It is 
true that the exigencies of the war have forced us 



into many State Socialist ventures, which in normal 
times we should have rejected, not on grounds of 
abstract principle, but for purely practical reasons. 
We have discovered that bureaucracy, as now organised, 
is inefficient ; that in the administration of our material 
affairs, the bureaucrat has neither the knowledge nor 
the skill of the independent industrialist. We are 
rightly proud of our Civil Service, of its high standard 
of honour, of its faithfulness, of its industry. Taken 
as a whole, it is probably the most highly cultured 
body of men in the world. But its culture is the 
culture of the schools ; its training is all compact 
of precedent and tradition. I am often struck with 
its seclusion from the strain and struggle involved in 
the conduct of industry. " These things are not for 
us," it says in effect. And it is entirely right. For 
this final and conclusive reason : It must concern 
itself with principles of citizenship as distinct from the 
economic function. I for one look to the time when 
our political problems shall be discussed in the political 
arena, undisturbed and unvulgarised by the selfish 
intervention of the " interests." Parliament must be 
finally so circumstanced, if it think right, to pursue a 
political policy at economic loss. I do not think such 
action would be frequent, because I believe that 
ethics and economics are so closely related that, 
almost always, what is ethically right will be found 
to be economically desirable. That is not, however,; 
to affirm that the State, as such, would not constantly 
be confronted with practical problems of the first 
magnitude. Not to go outside the ambit of the 
present argument, let us assume that national pro- 
ductive and distributive guilds are an accomplished 




fact. What is to become of the great spending de- 
partments ? Our military and naval requirements, 
education, pubhc health ? And what of the con- 
sumer ? The State must participate in the work of 
the Guilds or abdicate. 


The Wage-System 

It would seem to be a psychological truth that all 
of us who think and dream of freedom — mankind's 
most precious gift — are pecuUarly susceptible to the 
call of ever-recurring Messiahs or Messianic ideas. 
It is at once our high hope and our tragedy. Our 
hope, since if it were killed mankind would lapse into 
spiritual and social inertia ; our tragedy, in that we 
seem for ever doomed only to glimpse the Promised 
Land, yet^ never to set our wounded feet upon it. 
Nevertheless, our hope, builded upon a faith that 
is " the substance of things hoped for," carries us 
triumphant over evil and disappointment, our ears 
attuned to " the still small voice," our spirits refreshed 
by the lights that opportunely radiate the way. ** Man 
is not man as yet," sang Browning, instinctively 
conscious that rare spirits lure us on to the mark of our 
high calUng. So it comes about that we rise superior 
to the perpetual frustration of our hopes and reason- 
able expectations, seeking for the cause of failure as part 
of the day's work, so that the morrow's march may 
be the better planned. 

Although my own personal preoccupations have 
been with the material — the economic — problems of 




life, I have always been conscious (was it nearly three 
centuries of Quaker blood stirring within me ?) that 
the spiritual apperceptions must be correlated with 
our economic principles and discoveries ; that the 
moral and the economic are the obverse and reverse 
of the same coin. If, then, what follows is mainly 
an economic argument, it will not, I hope, be assumed 
that I am unmindful of the sj)iritual imi)lications that 
flow from — or create — economic conditions and 
changes. Unless this be so, we are thrown back upon 
a sterile economic determinism for which there is no 
philosophic sanction whatever. There are, indeed, 
some who contend that, granted certain economic 
conditions — capitalism, for example — certain economic 
results must inevitably ensue. But that need not 
delay us. It suftices to afhrm that economic principles 
are hnally conditioned by mankind's desires — desires 
which may be good or evil or both. Above all, the 
rooted instinct for freedom. 

It is now more than a century since the inventive 
and mechanic, the manufacturing, sections of our 
community revolted against feudalism for the freedom 
to exploit both nature and their fellow-men. Their 
problem was comparatively simple ; they had merely 
to render the wage - system more attractive to the 
labouring population than the existing feudal system. 
If we read the Uves of Thomas Cooper or Samuel 
Bamford, if we study the real motives and principles 
of Chartism, not forgetting Carlyle's essay, there can 
be Uttle doubt that, horrible though the story of early 
industrialism is, our forefathers instinctively beUeved 
that the wage-system marked an advance on feudalism, 
and, conjoined with political freedom, was to be an 



instrument of emancipation. It amounted precisely 
to this : freedom to the labourer to sell his labour ; 
freedom to the manufacturer to buy it. The Corn 
Law Rhymes of Ebenezer Elliott and others, which 
have passed into our Uterature, were directed, not 
against the abominations of wagery (the time for that 
was not yet), but against the poUtical and religious 
oppressions of the aristocratic interests. 

When wilt Thou save Thy people, 

O God of mercy, when ? 
The people, Lord, the people, 

Not thrones and kings, but men. 

It was a frenzied protest against a political system 
subdued to the economic power of landlordism and 
all that it stood for. Not a word or suggestion that 
the oppression of the industrial magnates was as the 
little finger to the thigh. Two generations of wagery 
were to live their squalid life and go their ways before 
we find singers like Edward Carpenter grasping the 
true meaning of industrial oppression, singing in 
similar numbers but with a different bias : 

Over your face a web of lies is woven, 

Laws that are falsehoods bind you to the ground, 

Labour is mocked, its just rewards are stolen: 
Arise, O England, for the day is here. 

The industrial developments of last century had 
two reactions: Lord Shaftesbury's agitation for the 
amehoration of factory Ufe, particularly the exploita- 
tion of child labour ; and the Trade Union movement, 
aiming at the maintenance or increase of wages. 
Widely different though both these movements were 
in tone, temper, and objects, they held in common 





the belief that the wage-system was inevitable, even 
if it was not defensible. Feargus O'Connor and 
Robert Owen (both Celts, incidentally) vaguely 
realised that there was some trickery, some fraud, in 
it ; but they failed to find it. Owen thought that the 
elimination of profits could be obtained by voluntary 
association, whilst objecting to combination and 
monopoly, never realising that the monopoly value of 
labour is the way to freedom. Fourier's formula was 
five-twelfths of the product to labour, four-twelfths 
to capital, and three-twelfths to management. Louis 
Blanc visualised an association of producers who 
would market their commodities in the usual way. 
He was, in short, a co-operator. The wage-system 
was as much the bed-rock of their schemes as it 
was of contemporary employers. Later came Marx's 
analysis of capitalism, in which he, too, postulated 
as essential the commodity theory of labour. Nor 
were men's minds enlightened by the discovery that 
the Shaftesbury reforms strengthened and regularised 
the wage-system ; nor that the economy of high wages 
had exactly the same result. Then, as now, wages was 
the price paid for labour as a commodity ; then, as now, 
the labourer's person was separated from his labour, 
the labour commodity being the true object of the 
employers' solicitude. 

This severance of the labourer from his labour is no 
mere academic distinction. It cuts at the roots of our 
industrial life ; it explains much in the social history 
of last century. If, for example, we analyse the Poor 
Law Report of 1834— the most ghastly official docu- 
ment ever written— we shall discover that the con- 
tention underlying it is that employers claimed to buy 



labour when it was in demand, but declined any 
cognizance of the labourers' bodies and souls, as 
employers, when there was no demand for the labour 
commodity. Accordingly, the responsibility of main- 
taining unemployed life was foisted upon the com- 
munity. The story of the tragedy that has continued 
for a century, and still continues, beggars the realism of 
a Zola or the passionate denunciation of a Carlyle. It 
was as imperative to the employers that they should 
maintain a reserve of employment (for that is precisely 
what unemployment is) as that they should maintain 
a reserve of cotton or wool or coal or any other raw 
material. Nor ought the employers' responsibility 
to have been remitted when improved machinery 
threw labour on the market. Apart from the argument 
— sound as far as it goes — that new machinery created 
new industries and therefore ultimately increased 
the demand for labour, it remained a fact that labourers 
thus rendered unemployed belonged to the trade into 
which they had been drawn by the employers, and, 
since even as unemployed they fulfilled the function 
of keeping wages at the competitive minimum, they 
ought in justice to have been maintained by their 
trades until they were drafted into the vaunted new 
industries to be created by new machinery. 

The mediaeval guilds shouldered this responsibility ; 
the wealthy manufacturers of the great industry 
systematically shirked it. They did not put their 
reasons so bluntly as I state it now ; we must admit 
that they never thought of it in that light. They were 
convinced — it was the spirit and atmosphere of their 
period — that, just as one enters a shop and buys a 
pound of sugar, so they were entitled to go into the 






market and buy so many units of labour. Sugar 
was a commodity ; so also was labour. We look 
back with horror on the industrial and social conditions 
of the period that culminated in the Poor Law Report 
of 1834. Worse remains to be told : the precedent 
of the severance of the labourer from his labour, then 
created, continues to this day. We have covered it 
with trappings of so-called social reform, with a more 
humanised Poor Law, with Labour Exchanges, with 
petty little mechanisms for accelerating " the mobility 
of labour" (another false god!), but even as I write 
our whole industrial world is based upon the hypothesis 
that labour is a commodity, subject, Uke other com- 
modities, to the law of supply and demand ; that the 
sacred element of personality in labour, industrially 
considered, must be disregarded. Employers still refer 
to their employees as " hands." 

The foregoing seems so clear to me, and yet finds 
so little acceptance amongst the generality of man- 
kind, that I often wonder whether I do not suffer 
from some overpowering delusion. I comfort myself 
with the reflection that, in former days, masters re- 
garded their slaves as chattels, and that consequently 
it need not surprise me that to-day employers regard 
their employees' labour as a commodity. And when 
I think a little more about it. I remember that the 
abolition of chattel slavery was hastened by those 
grim Northern employers who frankly avowed that 
it was wasteful and uneconomic to maintain the body 
when you could buy the labour for a wage. The 
chattel was, by a sleight of hand, transformed into a 
commodity. Let me set it down with less feeling and 
more exactitude. Why do we distinguish between 

" salary " and " wage " ? Why do we divide the 
" salariat " and the "proletariat" into separate 
classes ? And why does the salariat rank above the 
proletariat ? The reason is so simple that I am almost 
ashamed to write it. Because the salariat retains, 
and is, in fact, paid for, its personality, whereas the 
proletariat sells only its labour-power considered 
purely as a commodity. Thus we instinctively and 
rightly give to salaried Robinson a higher social status 
than wage-earner Jones, because Robinson has a 
recognised and recompensed personality, whilst Jones 
supplies only a non-human quality, from which his 
personality is ex hypothesi excluded, which the 
economists brutally describe as the " labour com- 
modity." When Robinson goes on holiday, his salary 
goes with him ; when Jones goes to a funeral, his 
" time " is deducted. In times of depression, Robin- 
son, still on salary, sits at his desk ; Jones tramps the 
streets, because no one hath hired him. But it by no 
means follows that, because we do not buy Jones's 
personality, he therefore has none. We put him into 
a status or caste from which we do not formally demand 
personality. We are, of course, glad to profit by his 
personality ; but by putting him on a wage-basis we 
defraud him of its economic value. 

How, then, is the fraud effected ? We first fix the 
wage rate at a competitive market value, reached by 
the existence of a labour reserve, which we wrongly 
call the unemployed (putting the charge on the com- 
munity), then, having purchased the labour on a 
commodity basis, the buyer — i.e. the employer — 
obtains absolute possession and control of the pro- 
ducts of the purchased labour and pouches the surplus 



value created. That is what Lord Wrenbury meant, 
in a recent letter to the Times, that at the root of all 
present discontent is found the problem : who shall 
have a share and interest in the thing produced ? I 
do not think he quite realised that he was raising 
the embarrassing dilemma — partnership or wagery. 

The psychological aspect of the commodity value 
of labour is not less important than the economic. 
Our moral sentiments are largely derived from our 
social environment. An Oxford graduate, meeting a 
commercial traveller in a railway carriage, finds that 
he speaks a different language, thinks on a different 
plane, sees life in different values. They may have 
much in common — patriotism, for example — but, 
generally, the two men, having passed the time of 
day, are rather glad to lapse into silence, each reading 
his own papers or books, every sentence of which 
would be differently interpreted by the two men, 
whose mother language tends to diverge each from 
each. In this way, economic environment inevitably 
creates different castes, with danger to the nation and 
grave moral loss to its people. Now what in India 
is called caste, in England is called status. I am far 
from affirming that they mean the same thing East 
and West. Status here is a much more elastic term 
than is caste in India ; but nnUatis mutandis they 
have a distinctly similar significance. In this con- 
nection our phraseology is not without interest. We 
say of some workman that " he knows his place " ; 
it is frequently said that the harshest taskmaster is 
the workman become master ; we must not let its 
humour distract us from the true implication of the 
epigram, " poacher turned gamekeeper " ; rather more 



remote, yet relevant, is the " beggar on horseback." 
We regard it as incongruous that any man should get 
out of that station in life to which it has pleased God 

to call him. 

It is sometimes difficult to ascribe his true status 
to this or that man — it is possible, though not pro- 
bable, that one might mistake a schoolmaster for a 
merchant — but there can be no mistake possible in 
instantly realising the status of a wage-earner. In 
fact, whatever may be their several gradations, every 
man who sells his labour as a commodity, and because 
he does it, belongs markedly and unmistakably to his 
own status. There is a universal conspiracy to put 
him there and keep him there. We first put him in 
a "working-class district," just as the slaves were 
segregated in the " slave quarters," now known as 
" Negro quarters." We next send him to a '* working- 
class " school (note the recurrence of the word " class "), 
where we are careful to instruct him and equally 
careful not to educate him. Having graduated in 
shop or factory, we bring all our influence to bear and 
all our mechanical arrangements, particularly trans- 
port, to compel him to marry early and marry one 
of his own " class." If he marry a " middle-class" 
girl we slightly shudder ; if an " upper-class " girl, 
it immediately becomes either a scandal or a romance, 
according to circumstances or the whimsies of the 
Press. Then, when he is mated and settled, we 
surround him with a veritable mesh of special legisla- 
tion, partly contrived by far-seeing employers, partly 
by political busybodies. In the Southern States, on 
tram and train, seats are specially reserved " for 
coloured passengers"; in Great Britain, we have 





the " workman's train." Whatever our motives, 
good or bad, the status of the wage - earner has 
crystalHsed into a social factor of terrible aspect. 

We may be sure that the wage-earner does not 
voluntarily belong to his economic status and will 
leave it at the first opportunity. But the transition 
from one economic condition to another is always 
difficult, and in the case of the wage-earner is well- 
nigh insurmountable. He is not the subject of a 
mere social convention, such, for example, as divides 
a manufacturer from a landowner ; his position is 
rooted in economic subjection and he must remain 
where he is pending an economic revolution. It is 
sometimes asserted that if he would exercise his 
pohtical powers he could win through. But not the 
least of his disabilities is the fact that wage- servitude 
limits and modifies citizenship. We know that 
economic power precedes and dominates pohtical 
action. If we doubt it, we need only read Ostrogorski's 
constitutional studies, particularly his analysis of the 
caucus system. Now the essence of wagery is that 
economic power passes with labour power to the 
entrepreneur. No economic power is reserved to the 
labourer because his wage is based upon the bare cost 
of sustenance. The result is that we have two types 
of citizen— the "active" and the "passive." I 
venture again to quote what I have written else- 
where : 1 

" Just as you cannot eat your cake and have it, 
so you cannot sell your life and yet retain it. Brown 
has Smith in his pocket because Smith's labour, and 

1 National Guilds (Geo. Bell & Sons Ltd.), p. 54. 




the life having gone into the labour, leaves Smith 
inert, lifeless, spiritually dead. Whatever the poli- 
ticians may tell him, he is inevitably a passive citizen 
because, in the guise of a commodity, he has sold his 
hfe. Every week he sells it ; every week he and his 
family mount the altar and are sacrificed. How 
different is it with Brown! He not only possesses 
his own soul but has Smith's in addition. Smith's 
life enters into Brown's at breakfast, lunch, and 
dinner. The price that Labour pays for enduring 
the wage-system is its own soul ; the political sequel 
is passive or subdued citizenship. And even though 
the Smiths sit on the Treasury Bench and put on the 
airs of the master, they cannot escape from their 
economic subjugation, with its correlative civic 
passiveness, if they remain content to sell^ their 
brethren into the servitude of the wage-system." 

" No nation," said Lincoln, " can exist half -slave 
and half-free;" no political system four-fifths of 
whose electorate is " passive " can work for righteous- 
ness, even if haply it escape dissolution. 

The question will arise in every generous mind, 
why should not Great Britain, with its humanitarian.^ 
traditions, sweep away this dishonest system? We 
abolished slavery a generation earlier than did the 
United States; if slavery, why not wagery? Ah! 
If we only could! But there is this fundamental 
difference between slavery and wagery : the aboHtion 
of slavery consolidated the industrial system; the 
abolition of wagery involves its destruction. We have 
seen that when the employer buys labour, based on 
the bare cost of maintenance, he secures to himself the 




market value of the product— as the Marxians quite 
accurately phrase it, " the surplus value." It is out 
of this surplus value that rent, interest, and profits are 
paid. The entrepreneur is therefore in a cleft stick : 
If he engage labour at the market value of the product 
of labour, there is clearly no fund to pay rent and 
interest, to say nothing of his own profit ; if he buy 
labour at its commodity value (his onlv alternative 
under industrialism), he lends himself, willy-nilly, to a 
fraud upon Labour. Thus we discover that the in- 
dustrial system, in the final analysis, is based upon 
the commodity value of Labour, which, ethically 
considered, is a trick or a fraud. That is why the finer 
spirits, instinctively sensing its true nature, have 
always rebelled against it, yet knowing of no cure. 
For, being an evil, it infects its votaries with its con- 
tagion, and we see it in their attitude towards life, 
their tone and manners, their astonishing obtuseness 
to spiritual values. When we determine wagery, we 
destroy the existing industrial system. Let us at 
least do it with our eyes open. 

Between the comparatively small group that exists 
on rent, interest, and profits (exercising, in consequence, 
a disproportionate poHtical power), and the great mass 
of wage-earners are the salaried classes, an inchoate, 
variegated, and unorganised aggregation of fortuitous 
atoms. It is, of course, impossible to generalise about 
the middle-classes for precisely the same reason that 
you cannot indict a nation. Nothing you can say or 
criticise applies to all of them. Some of them, by 
education, training, and milieu, are closely related to 
the actual exploiters ; others are equally close, in 
interest and sympathy, to the wage-earners. An in- 




dustrial insurance agent, living upon commission, is 
practically a proletarian. In many ways we may 
say of the lower middle-classes that they are as much 
under the harrow as the wage-earners themselves. 
A clerk earning £2 a week, although of a higher status, 
must necessarily live very much the same life as an 
artisan : is probably sprung from the artisan class, and, 
unless he possesses special abilities, will probably 
die in the atmosphere and environment of Labour. 
He has been educated at an elementary school with 
working-class children, and, almost certainly, will 
marry an artisan's daughter. 

This particular type of the salariat is obviously 
dominated by the conditions of the wage-system. It 
is the well-considered policy of the industrial leaders 
to keep the lower middle-classes in a different, and 
nominally higher, status from Labour ; but their in- 
comes are regulated by the amounts paid in wages — 
so much to labour, a trifle more, plus a little mock 
amenity, to the clerk and all who rank with him 
in social estimation. The abolition of wagery would 
bring in its train a most happy release to the lower 
middle-classes from an intangible and subtle tyranny, 
against w^hich they have not even the ineffective 
redress of Trade Union organisation. Situated as 
they are, often mocked by the lure of small social 
advancement, it is hardly surprising that they be- 
come saturated with a servile and obsequious spirit, 
resulting in a dangerous and depressing moraUty, 
which lacks even the saving virtue of that courage 
and strength which makes our possessing and govern- 
ing classes, the most powerful factor in our national 



In the constructive chapter to follow, I shall deal with 
the forces at work destined to destroy the wage-system 
and constitute a nucleus, in the form of incipient guilds, 
to take its place. But I would now emphasise my 
own conviction that no really enduring edifice can be 
built until, realising the impHcations of wagery, we 
protest against it on moral and religious grounds, and 
will its destruction in our passion for justice. I am the 
fi?^ to admit that the science of economics is neither 
moral nor immoral ; it is non-moral. Properly under- 
stood, it is a dispassionate examination of every purely 
economic factor, a diagnosis of every economic disease. 
Just as a doctor dispassionately reports on a prevailing 
disease or plague, so does the economist report the result 
of his inquiries into economic facts. But when we have 
the doctor's report, it becomes our moral duty to 
extirpate the plague by legislation, by organisation, by 
personal example ; so also, when we have the econo- 
mist's rejx)rt, it is equally our moral duty to eliminate 
the discords and secure economic harmony. 

I confess that I see no signs of an awakening amongst 
our religious leaders. In other days, we might have 
looked to the churches with some confidence. Alas ! 
John Ball died a very long time ago. It is, unfortun- 
ately, only too true that our churches take their colour 
from their congregations. This church, well endowed, 
is attended by the very pink of respectability. No hope 
there ! That church, poor and unendowed, is ruled by 
its deacons and elders, who, responsible for its small 
revenues, more or less consciously dominate the teach- 
ing and the preaching. But clerical inertia, I think, 
must also be explained by clerical want of thought. 
Never, in the history of civilisation, has organised 



religion been so deeply separated from living issues as 
to-day. The line of least resistance is the line of least 
thought, and social reform is a soothing plaster to the 
conscience. We have reached a stage in our social and 
economic history when mere reform must give way 
to the revolution involved in wage aboHtion. Is it 
unreasonable to call upon all who are spiritually 
minded, of all creeds and none, to make the great 
decision that, so far as in them lies, wagery shall no 
longer defeat or deter the ascent of man ? 



Guild Organisation 

It is conceivable that the possessing classes, touched 
by a spirit of compunction, might voluntarily forswear 
the wage-system and call Labour into partnership. 
Conceivable, for it has historic sanction?" but ex- 
tremely unlikely, because new epochs do not come 
without birtli-pangs. Whilst we look eagerly for 
the co-operation of men of good-will, of every class and 
condition, it would be foolish to rely upon any forces 
in society other than those who most directly and 
intimately and urgently benefit by the change. The 
abolition of wagery is primarily a great movement of 
emancipation, and they who would be free must 
strike the blow. Tolstoy, great pacifist though he 
was, always recognised that the exploiters were on 
Labour's back and would have to be forcibly shaken off. 
It is well that it should be so, -for freedom that comes 
without a stern struggle may be no freedom but a 
mirage. It is in the nature of things that those who 
hold should strive to keep ; that they should en- 
deavour to accumulate more. It is the simple truth 
that to him that hath more shall be given. Endow 
any class of men with power — the Bureaucracy, for 

example — and we may be sure that before long 




they will, as they say in Parliament, " seek further 

Nor must we forget that the present possessors can 
offer a reasoned apologia. There is the practical man, 
honest and considerate in all his dealings, who may 
contend that he has done his best despite all the 
theorists. He inherited the wage-system ; he has 
made the best of it, humanising it as opportunity 
served. Not a bad fellow, this practical man, fearing 
God and honouring his neighbour. Personally, I 
like him. Then there is the aristocrat, classical in his 
literary tastes, accepting the canons of the classical 
econoniy, deeply concerned to maintain our traditions 
and pass them on unsullied and even purified. Listen 
to him : ^ 

" The system must remain because it is the true 
inheritor of the great traditions, of the learning 
laboriously gathered through innumerable generations. 
The faith handed down by our fathers must be con- 
served. This great edifice, broadly speaking, has 
been built up by the privileged classes of ample leisure 
and large resources. We are sentinels sternly bidden 
to guard the sacred catena of civilisation, to see that 
there shall be no break in the continuity of history, 
tradition, and culture. What prouder mission was 
ever entrusted to a privileged class than to maintain 
civilisation ? If, therefore, we painfully realise the 
continuance of the wage-system and the horrible 
things implied by it, it is not because we do not sym- 
pathise, but because larger and more enduring con- 
siderations must prevail. We cannot risk the loss of 

^ National Guilds, p. 117. 




another Alexandrine Library ; the Louvre was saved 
by a miracle ; Cromwell's bullets are still embedded 
in our churches. These are symbols. Democracy 
will triumphantly write * Ichabod ' on our sacred 

It is the age-long defence of the established order. 
Always, when we hear it, our hearts are moved, and we 
instinctively respond to it. Yet, in my experience — a 
long one now, unfortunately — of revolutionists, I 
have never yet met an iconoclast. It is the love of 
the great traditions and culture that urges them to 
strengthen and beautify. 

I looked. Aside the dust-cloud rolled, 
The waster seemed the builder too; 

Uprising from the ruined old, 
I saw the new. 

But can we not turn the classicist's guns upon 

himself ? Is it not true that our greatest culture and 

art developed before the wage-system began ? Has 

not industriahsm vulgarised everything it has touched 

— craftsmanship, architecture, art, literature, music ? 

Did not Ruskin love the ancient culture and our great 

traditions ? We remember — indeed, we cannot forget 

— his criticism of our modern architecture. Did not 

Matthew Arnold love culture and beauty ? We 

remember his fulminations against the Philistinism 

of his period. 

We too now say 
That she, scarce comprehending 
The greatest of her golden-voiced sons any more, 
Stupidly travels her dull round of mechanic toil, 
And lets slow die out of her life 
Beauty and genius and joy. 



I do not think we need be deeply moved b}^ the 
plea that a privileged class should be maintained to 
guard the sacred catena of civilisation. Our literature, 
our pictures, our furniture, our houses point to a very 
different conclusion. 

Our answer to the practical man is equally decisive. 
" Yes ; you have done your best, but look ! . . . 
Charles Booth has just died and Seebohm Rowntree 
still lives." 

It was natural and inevitable that the wage-earners 
should combine to protect themselves, in some degree, 
against the brutalising effects of wagery. They, like 
their employers, had never analysed it ; they knew 
nothing of the actual economic process by which they 
were despoiled and kept in bondage. But they knew 
where the shoe pinched, and sought what easement 
they could. They accepted the wage-system as a 
natural law and only wished to mitigate its harshness. 
So they formed trade-unions and friendly societies 
and fraternities, gaining some measure of inspiration 
from the fraternal relations that ensued. Their history 
is not without turbulence ; nor were their decisions 
always wise and prescient. The same can be said of 
our statesmen, so why blame unduly the trade-imions ? 
They engendered riots and were as often jockeyed 
into rioting by premeditated provocation. All our 
industrial centres have a story to tell in this regard. 
Not once nor twice have the military waited for the 
provocation that preceded the reading of the Riots 
Act. We must remember, however, that strikes and 
riots are but incidents in the history of Trade Unionism. 
Not because of strikes, but despite them, has Trade 
Unionism become a necessary factor in our economy. 




Mr. Binney Dibblee, a conservative and cautious 
economist, in his book, The Laws of Supply and 
Demand, has this to say : 

" They are usually considered to be associations 
founded to control the supply of Labour and there- 
with to bargain for its price with the employer, and, 
as they have energetically p)erformed this duty for 
their members, it is undeniably true that their work 
in this respect is of the very highest importance. But 
this is not logically, even if it was historically, their 
primary cause of origin. If these associations had 
been tumultuous combinations arising out of strikes, 
or, as Adam Smith implies that they are, * conspiracies 
against the pubhc,' they could never have had the 
principles of cohesion and permanence which have 
raised them to the mighty power they now prov^e to be. 
Philosophically speaking, their final and necessary 
cause was the maintenance of the reserves of labour, 
which are required by the system of modem pro- 

I have already pointed out that, in equity, the 
industries themselves should have maintained their 
own reserves of labour. But the employers argued 
that they need only buy the labour commodity as and 
when they wanted it, leaving the care of the unem- 
ployed to the Unions or the community. Mr. Dibblee 
agrees with me : 

" What shall we say of the pretentious body of 
doctrine, calling itself scientific, which rose up at 
that time to stamp the hall-mark on intellectual 
superiority of greed and crown ruthlessness with 



a halo ? Of all the crimes committed in the name 
of Knowledge this was, perhaps, the worst. It has 
done more harm over a century than all the wars 
of the period. Intellectually, it was more impious 
than the condemnation of Abelard, the muzzling of 
Galileo, or the hounding of Semmelweiss to madness. 
It is no wonder that men who kept their senses called 
political economy the cruel science ; but how is it that 
people were so slow to see that its theories were 
stupid ? " 

What was this body of doctrine which " has done 
more harm over a century than all the wars of the 
period " ? Nothing more nor less than the com- 
modity theory of labour, the wage-system. And the 
only mitigating factor, so far as I know, was Trade 
Unionism. It is, therefore, hardly surprising if we 
must look to it as the nucleus of the new coming 
economic formation to produce wealth without wagery. 

Assuming, then, as we must, that the employers 
will not volimtarily forgo their power to buy labour 
in the market on exactly the same principle as they 
buy cotton or wool or leather or any other commodity, 
the practical question arises : How can Labour 
circumvent the Employer and exact a social value for 
its labour ? The only answer I know is that it must 
secure a monopoly of its labour, by an organising 
campaign transcending in brains, imagination, and 
magnitude anything it has ever before attempted. 
It is here that we disclose the root and cause of the 
class struggle. Both Capital and Labour are agreed 
that the production of wealth is essential to our 
national life. Capital aifirms that production is 




only possible, on commercial principles, on its freedom 
to buy labour-power according to the laws of supply 
and demand. Labour replies that, whereas formerly, 
that system seemed preferable to feudalism, its result 
has been to keep the labourer always on the verge of 
starvation and to defraud him of the social value of 
his labour. Therefore, the time has come to make 
a fundamental change. Production can be almost 
indefinitely increased, but it must be by a partnership 
between Labour and Capital or between Labour and 
the State, the latter for preference. The class struggle, 
therefore, has a negative and positive aspect : a re- 
fusal any longer to sell labour as a commodity ; a 
proposal that Labour shall have a definite " share 
and interest in the thing produced." The struggle 
obviously centres round the decision who is to control 
labour. Capital can only control labour through the 
medium of a free market ; Labour can only control 
labour through a monopoly market. The issue is 
definitely joined. 

It is important that we should clearly understand 
what is meant by supply and demand. When an 
employer engages labour, he speaks as though there 
is a law of supply and demand in regard to labour. 
This view is too narrow to be tenable. The true 
position is that there is a fluctuating demand for the 
products of labour. Now, it is evident that, even 
if Labour, by organisation or by a legal enactment 
compelling every worker to join his appropriate Union, 
were to secure a monopoly of labour-power, the demand 
for manufactured products would still fluctuate ; 
but the supply of labour-power would be permanent 
and stable. The result of the monopoly control of 



labour by Labour would therefore be that all the 
workers concerned would have rights of maintenance, 
and imemployment would be recognised for what it 
really is — namely, a reserve. 

I think the ground is now cleared for the considera- 
tion of the constructive side of our programme. Re- 
jecting both the theory and practice of the commodity 
valuation of labour, realising that such rejection can 
only be attained in practice by organising labour 
until it is " blackleg-proof," further, realising that such 
a development means the downfall of the existing 
industrial system, by what economic organisation 
shall production be continued and increased ? No 
student of the problem will doubt that the trade-unions 
must be the nucleus of the new formation ; every 
student will agree that they are only the nucleus ; 
that the other economic elements in society must be 
co-ordinated and brought into harmonious relations 
with the labour monopoly. When this unification 
has been achieved National Guilds will become an 
accomplished fact. 

At the first blush it would seem as though the 
obstacles in the way to labour monopoly were insuper- 
able. It would be foolish to underestimate the diffi- 
culties, but they are not so formidable as surface 
appearances suggest. Two lines of policy must be 
pursued : (i) The craft unions must be changed into 
industrial unions ; (ii) there must be a continuous 
process of amalgamation or federation of all unions 
in the same industry. In regard to the craft unions, 
we must remember that many of them were originally 
formed for the protection of their " craft and mystery "; 
in their wildest dreams they never imagined that they 



would become the representative labour organisations 
of the whole industry. Their rules and regulations 
were therefore based on the idea of exclusion ; they 
were as deeply concerned to limit their membership 
as to argle-bargle with their employers. Two un- 
foreseen developments have materially modified their 
first purpose : automatic machinery has created a 
semi-skilled class of workman who has become a 
standing menace ; the organisation of unskilled 
workers has taught them that their wages are ulti- 
mately governed by the cost of sustenance. 

Apart, then, from any commodity theory of labour, 
or any grandiose scheme of National Guilds, economic 
developments are forcing the craft unions to widen 
their borders, to relinquish the craft basis of member- 
ship, and to become industrial unions. The process 
of amalgamation, often by federation, also proceeds 
apace. The miners are much more closely integrated 
than they were ; the railwaymen have now practically 
one union ; the cotton operatives, working federally, 
draw closer. Nevertheless, there is a long row to hoe. 
The table on the opposite page shows the situation, 
from this point of view, prior to the war. 

This table is perhaps misleading without an expert 
knowledge of trade-union organisation. In most of 
the trades enumerated the excessive number of the 
unions only represents a degree of local autonomy. 
But the figures given are significant as they stand. 
They tell certainly of the need for further amalgama- 
tion and centralised direction ; but they show that 
trade-unionism has flourished despite the adverse 
conditions of former times. Extension of member- 
ship in the future will be largely automatic. It is 



also worth noting that a powerful movetnent is afoot 
to make membership in the unions compulsory by 
legal enactment. 

Trade Group. 

Building and Con 
tracting . 

Mines and Quarries 

Metals, Engineering 
and Shipbuilding 

Textile Trades . 

Paper, Printing, and 
Bookbinding . 

Clothing Trades 

Woodwork and Fur 
nishing Trades 













(68 unions) 

(84 unions) 

(211 unions) 

(273 unions) 

(38 unions) 


(40 unions) 

(91 unions) 

It is evident, however, that when we have secured 
the labour monopoly we have only begun the con- 
struction of National Guilds, for we must bring in also 
the managerial and administrative elements. Just 
as the mediaeval Guilds were composed of masters, 
journeymen, and apprentices, the National Guilds 
here predicated are equally inclusive— administration, 
managerial, scientific, inventive, as well as every 
worker in the industry— nothing less than a regi- 
mented fellowship. Whilst I beheve that as time goes 
on the standard of living of all Guildsmen will tend to 



approximate* I recognise that a hierarchy is necessary 
to the effective working of the (iiiilds. The appoint- 
ments to the administrative and executive oifices 
can no longer come from above ; they must be demo- 
cratic in principle. But it is wise to avoid any political 
analogy in this connection. When we speak of 
democratic election we generally mean the political 
system of counting noses. An industrial democracy 
means the choice of the men who know — a choice not 
obtained by any financial pull, or family influence, 
but solely based upon fitness. It follows that only 
those who have the means of knowing can, or ought, 
to vote. 

Now, the British artisan is an uncommonly shrewd 
judge of workmanship. He knows the best men 
in his own shop. On the principle stated, it is 
the actual manual workers who should choose their 
own foremen and sub-managers. In every industry, 
in every locality of every industry, men work in 
groups. There are workshop groups, office groups, 
managerial groups, all these groups linked together 
in various ways. When I write of democratic election, 
the principle in mind is really group selection. But 
the system of choosing the hierarchy is only incidental 
to the argument ; the point now to be emphasised is 
that a hierarchy is essential. It is rather important 
to stress this point because I find it assumed that, 
with the trade-unions as the existing nucleus of the 
future Guilds, their rough-and-ready democratic 
methods must necessarily be adopted and regarded as 
sacred. There is absolute unity amongst thinkers of 
every school that industry must be democratically 
administered ; but that broad fact by no means binds 



us to any inappropriate method of democratic election 
or selection. 

And now let us suppose that we have finally dis- 
carded the wage-system and co-ordinated into National 
Guilds every industrial factor. What are the dimen- 
sions of these Guilds, and if the wage-system is abol- 
ished how are the Guildsmen to be paid ? 

Please observe that the use of the word '' National " 
is deliberate. In former times the Guilds were local ; 
in the county of Norfolk alone there were six hundred. 
Industrially considered now, locality has ceased to 
count. The railway, motor-car, telegraph wire, tele- 
phone have annihilated space, whilst the tendency of 
every industry is to concentrate and unify. A textile 
Guild for Lancashire only would be a futile under- 
taking ; much more futile any local engineering Guild. 
The Guilds must be organised on the national basis 
or not at all. There is another convincing reason for 
the National Guild : We have already postulated that 
it must maintain its own unemployed ; it logically 
follows that the care of the sick and the pensioning 
of the aged should be undertaken by the same bodies. 
If we are to have the Guilds on a national basis, it is 
clear that they must be numerically very strong. My 
own analysis of the industrial population leads me to 
conclude that not more than twenty-five Guilds are 
required. Here, for example, on the following page, 
is a list of thirteen main industries, each employing 
over 100,000 persons. 

I particularly draw attention to the tribute that 
Labour pays Capital. Note also that in Railway 
Construction, where the engines are largely built for 
use and not for profit, the net output is only £^ in 



excess of the average wage — an extremely significant 
fact. These may be considered the main industries, 
the others being largely ancillary or subsidiary. If 
any reader imagines that the National Guilds here 
proposed are not much more than large co-operative 
societies, I hope these figures will disabuse his mind 
of any such misconception. The reorganisation of 
industry on Guild principles is a mighty affair, greater 

Trade Group. 










Building and Con- 









Coal Mines 




Iron and Steel . 





Shipbuilding . 





Engineering . 





Clothing and Mil- 

linery . 





Railway Construction 





Boot and Shoe 










Woollens . 





Printing . 




Bread and Biscuits . 




Laundry . 







even than our present war organisation. And should 
I succeed in convincing you of the substantial justice 
of my argument, pray do not advocate it amongst 
your friends as a Uttle, inconsiderable thing. The 
abolition of wagery, with all its implications, spiritual, 
intellectual, and material, is a greater event than the 
abolition of slavery ; the building up and bringing 
to eihciency and maturity demands the diplomacy. 

the skill, and piety that formerly went into the 
building of cathedrals. 

We may very shortly dismiss the question as to the 
substitute for wages. We now understand, I hope, 
that as wages is the price paid for labour as a com- 
modity, when labour ceases to be a commodity it ceases 
to receive wages. What, then, does it receive ? The 
answer can be most easily made by an analogy. We 
do not go into the labour market to buy soldiers' 
labour, for the simple reason that the work done by the 
soldier is in no sense a commodity. It is a duty, per- 
haps a privilege. The consequence is that the soldier 
is on " pay " ; whether he be general, colonel, major, 
lieutenant, or private, he draws his " pay." And he 
receives pay whether he is fighting or "in reserve " 
(the military equivalent for industrial unemployment), 
or, if he be a professional soldier, during peace. 
Now, this distinction is not merely verbal. It ex- 
presses a conception of work and dutyjpoles asunder 
from wage-servitude. Oddly enough, when wage- 
earners go on strike, they say they are on " strike 
pay." Whilst words do not change facts or condi- 
tions, I think the new conditions would almost cer- 
tainly change the word, and Guild-pay would become 
the natural and usual custom. But from whence 
would the pay derive ? From the products of the 
Guild, probably measured by time. I have not the 
space to argue this question. Those interested will 
find it discussed in National Guilds, pp. 81, 82, 136, 137, 
181, 182, 183, 184. 

There are many aspects of this new idea ; but I 
must now finally only briefly refer to the relation 
between the State and the Guilds. For sound reasons, 



notably the necessity that as citizens we must control 
our national destinies, it is supremely important that 
all the Guild assets should be vested in the State. 
The fundamental idea of the Guilds is that they shall 
exercise full control over labour and enjoy complete 
autonomy in all industrial transactions. Possessing 
such enormous economic power, the State must look 
to the Guilds to feed its budget. How is it to be done ? 
If all the industrial assets are vested in the State, then 
let the State rent them to the Guilds by a charter in 
which the terms are inscribed. Here we hit upon 
another economic doctrine. Rent originally was a 
tax in return for a charter or licence. This gradually 
grew into the economic rent as we know it to-day. 
But the abolition of wagery ipso facto destroys economic 
rent. The State would impose, not precisely the 
equivalent of economic rent, but a charge measured 
only by State requirements and not the full economic 
burden which the Guild could bear. As a consequence, 
all personal taxation would disappear. 

Those who follow philosophic thought cannot fail 
to observe the growing importance of " function." 
Seilor Ramiro de Maeztu has just published a book, 
Authority, Liberty, and Function, in which he is clearly 
and admittedly influenced by the new conception of 
function, which has arisen out of the discussion on 
National Guilds. When the Guilds are formed, and 
when they in their turn proceed to constitute a Guild 
Congress, it is easy to visualise a large national organisa- 
tion responsible for practically all our economic 
activities. I welcome such a consummation for at 
least two reasons : Because I am sure that such an 
organisation would carry on the business of production 



and distribution far more humanely and efficiently 
than under di^ided authority ; and, secondly, because 
I believe the State should be relieved of all economic 
functions, that it may the more freely devote itself to 
those spiritual problems the solution of which is the 
distinguishing mark of a great people. I assert, with- 
out arguing, that the political life of Western Europe 
has sunk to so degraded a level that politics is no longer 
an occupation fit for gentlemen. Every great issue 
that emerges is now never dealt with on its merits ; 
the " interests " confuse and choke it from its birth 
to its ineffective culmination. Education, foreign 
policy, public health, local government — every dis- 
cussion upon these subjects, pregnant as they are 
with vital consequences, is vitiated by finance and 
selfishness. Either we must purge our ParHamentary 
procedure of these diseased elements or sink into 
spiritual inertia and shame. I am old-fashioned 
enough to wish for a return to the old " grand 
manner " in politics. It will come back only when 
the subjects discussed and the temper in which they 
are approached are worthy of it. 




The principles underlying the call for National Guilds 
would indeed be barren if they had no applica- 
tion to, or shed no light upon, immediate problems. 
That is the conclusive test which differentiates the 
purely Utopian from the practical. It is easy enough 
to construct Arcadian systems ; every civilised country 
produces them by the score. Sometimes they appear 
in rehgious forms, sometimes in social. Often they 
are valuable critiques of existing life, such as Howell's 
Traveller from Altruria, a book in considerable vogue 
in my younger days. The real test is whether any 
great social change proposed is rooted in the past and 
present. It is true that here and there a nation can 
adopt some exotic change — Japan, for example. Signs 
are not wanting, however, that even Japan, wonderfully 
imitative though she be, is harking back to her 
own older ways. Under her Occidental externals, her 
Oriental heart remains unaffected. I suppose there is 
no country in the world, China possibly excepted, that 
is so tenacious of old beliefs and social customs as 
Great Britain. 

Every Englishman is at heart conservative and 

reverent of the past. Take the word I have so 




often used — " Guilds." It is centuries now since the 
Guilds died, yet there is no word which to this day 
radiates such a rich tradition of liberty and crafts- 
manship. It is, indeed, notable and significant that 
no word has" preserved its dignity, its sharp sever- 
ance from the mean and sordid, to the same degree 
as " Guild." When men and women meet together 
for some unselfish purpose, calling for craftsmanship 
or some effort involving work with the hands, they 
are Hkely to call themselves a ** Guild." Professor 
Lipson, in his Economic History of England, wTiting of 
the Craft Guilds, says : "In the effort to provide a 
fair remuneration for the worker and to reconcile the 
conflicting claims of producer and consumer, were 
developed principles of industrial control and con- 
ceptions of wages and prices to which we may perhaps 
one day again return." In summing up, he is again 
conscious of historic continuity : " The society in 
which we live is so deeply rooted in our everyday 
thoughts and habits, that the sequence of historical 
events which has brought it into being appears to us 
unavoidable and inevitable. From this standpoint 
it has been possible to bestow praise upon the Craft 
Guild, in spite of the fact that its fundamental principles 
are in many respects so completely at variance with 
modern ways of thinking. It is contended that the 
pressure of the Guild system in a primitive age, 
accustomed to the rudest forms of deceit, fashioned 
a public opinion in favour of those social and economic 
virtues that have now become a commonplace, and 
schooled men to recognise elementary maxims of 
honesty in trade and industry." 

Where I should quarrel with Professor Lipson is in 




his assumption that the industrial system has retained 
" those social and economic virtues that have now 
become a commonplace." It is true that in qualitative 
production we lead the world, even if France treads 
closely on our heels ; but we have taken out of labour, 
by an economic fraud, what the Craft Guilds would 
have saved labour, and by a too great devotion to 
mechanical production we are robbing labour of its 
pleasure in quality and the reputation it has gained 
from quality. Quahty springs from craftsmanship ; 
craftsmanship is the child of liberty and leisured artistry. 
It droops or dies in servitude. So, in the providence 
of God, it may happen that National Guilds may yet 
again " fashion a public opinion in favour of those 
economic and social virtues " now fast disappearing 
in a community accustomed, not to " the rudest 
forms of deceit," but to a subtle and dishonest 
industriahsm that makes labour its slave when it 
ought to make it at least its coadjutor. In tone, 
temper, and purpose, National Guilds, as outlined 
by their sponsor, revivify and carry on the old British 

The war came at a critical moment in our industrial 
history. Industrial discontent was rife ; strikes and 
lock-outs were in full swing. The Labour forces were 
drawing together and concerting common action. 
Investors were anxious, looking beyond the seas for 
opportunities to exploit unorganised labour. As 
political Labour lapsed into the dreamy pleasaunce 
of Westminster, industrial Labour grew exigent and 
rebellious. Already the wiser heads amongst the 
Capitahst leaders were pondering whether to fight or 
to conciliate the exasperated workers, who, at a time 



of unbounded prosperity, when the revenue from 
profits in five years had increased by 22 J per cent., 
found that real wages had fallen 10 per cent. The 
outbreak of hostilities effectually dissipated the plans 
both of masters and men ; in the face of the enemy 
there was a degree of unity, gratifying even if it 
was reasonably expected. A great necessity confronted 
us : our industrial resources had, at a moment's 
notice, to be concentrated on war production. We 
must have big guns, and yet bigger, shells and high 
explosives, uniforms and boots, food-stuffs. The 
Government had to make a quick decision : Should all 
this work be done under bureaucratic control, or could 
we leave it to the several industries to shoulder the 
responsibility ? 

Before I answer that question from the Guild's 
standpoint, it may be valuable to see how the situation 
was regarded by others. I think we may all agree 
that the most representative document issued on the 
industrial situation is the Garton Memorandum. This 
is a report drawn up, considered, and amended by 
" employers, representatives of Labour, and pubUc 
men of all parties," and finally published by the 
Garton Foundation, with the full approval of its 
trustees, Mr. Balfour, Viscount Esher, and Sir Richard 
Garton. Unless I am greatly mistaken, we shall hear 
a great deal in the near future about the proposals for 
conciliating Labour here adumbrated. The writers 
frankly admit that the war has in no way terminated 
industrial discontent. " The seeming prosperity of 
the country during the war has obscured the realities 
of the situation." The problem of industrial unrest 
has in no way been solved. *' The problems presented 



by a temporary crisis, in which economic considera- 
tions sink into a secondary place and the strongest 
possible appeal is made to the spirit of self-sacrifice 
in all classes, afford no real parallel to those presented 
by a return to normal conditions after a long period 
of dislocation." These are the considerations that 
have dictated this report. Naturally, inquiry must 
be made into the actual causes of unrest and dis- 
content. At the risk of being tedious, I shall make 
a number of quotations on this point, not only 
because they bear upon the problem of Reconstruc- 
tion, but because they go to show that my own 
analysis of the wage-system is recognised as sound 
and is not the conception of a crank. I quote the 
numbered paragraphs : 

12. " Failure to cope with the economic situation 
must necessarily involve widespread loss and misery. 
But the industrial problem is inextricably entangled 
with social and political developments. It is not 
merely that a certain minimum standard of material 
well-being is a necessary condition of moral and 
intellectual advance, or that commercial prosperity is 
an important factor in the strength and prestige of 
the State. Industry itself has a human side. The 
discontent of Labour is not exclusively a matter of 
wages and hours of work. It is becoming increasingly 
evident that it is based to a very large extent upon 
question of status and social conditions." 

43. "The attitude of unskilled and unorganised 
labour after the war will be influenced by the fact 
that in miUtary service many of them will have made 
acquaintance with a hitherto unknown standard of 



maintenance. They have been better fed and better 
clothed than ever before." 

62. " There is a real danger that this section may 
adopt to some extent the German view of Labour as 
a force which needs to be controlled and disciplined 
from above, and may regard war as an opportunity to 
accomplish this end." 

loi. " The chief economic objection of the worker 
to the introduction of labour-saving machinery arises 
from his belief, unhappily founded on experience, that 
its immediate effect is to lower his wages or deprive 
him of his job. With some quaUfications, this objec- 
tion is well founded." 

105. " Underlying all economic suspicion is the worker's 
instinctive aversion to becoming a mindless automaton, 
performing without variation a cycle of mechanical 
movements which do not lead to increased general 
proficiency, which open the way to no higher grade of 
employment, and which are prescribed not by himself 
or by the traditions of master-craftsmen of his class, 
but by an outside and unsympathetic authority in 
the shape of the scientific expert." 

134. " The questions which centre round wages and 
profits, important as they are, are not so vital as the 
questions of industrial relations and social conditions 
with which they are connected." 

139. " The limitation of output by Labour arises 
partly from the legitimate desire to restrict the hours 
of work in the interest of health, education, family 
life, and enjoyment." 

143. " Good work cannot be expected from men who 
are ill-fed and insufficiently clothed, or who feel that 
they derive no advantage from increased production," 




145. " The great question to co-operation is the 
question of status. The ill-will of Labour towards 
Capital and Management is not wholly a question of 
their respective share of earnings. . . . The funda- 
mental grievance of Labour is that while all three are 
necessary parties to production, the actual conditions 
of industry have given to Capital and Management 
control not only over the mechanism of production 
but also over Labour itself." 

147. " The attitude of a certain section of employers, 
who look on their employees as * hands,' as cog-wheels 
in the industrial machine, having a market value 
but no recognised rights as human beings, is bitterly 


My first object in quoting these excerpts is to show 
that my own rather scientific analysis of the wage- 
system talUes exactly with its description by responsible 
business men. I have thought it important to state 
the case with verbal precision ; it is, however, equally 
important that it should be endorsed by writers well 
versed in practical affairs. We shall never get a true 
vision of the next great emancipating movement unless 
we thoroughly appreciate the foundation of existing 
industrialism. But we need be under no delusions : 
wagery will not disappear in a day ; the conscience 
of mankind has yet to be shocked, and after that must 
come the gradual adaptation of the new industry to 

the new thought. 

My second object is more germane to my text, 
which is Reconstruction. Two practical issues emerge 
from these excerpts, just as they emerge from an 
abstract statement of Guild principles. These are 
(i) the question of status ; and (ii) of partnership. 




They are, of course, obviously related to each other. 
Nevertheless, it is conceivable that a change of status 
might lead to something other than partnership — to 
profit-sharing, for example. It is clear, I hope, that 
if we could place Labour upon some basis other than 
the commodity valuation, we ipso facto change its 
status. The Guildsman, rejecting as he does the whole 
theory of modern industriahsm, frankly faces the 
consequences ; but the Garton writers, believing in the 
continuance of industrialism, and therefore of wagery, 
seek a half-way house. The point to be noted is that 
they necessarily travel in the direction of the Guilds. 
And like the Guildsman, they realise that partnership 
is the only alternative. They accordingly propose a 
certain form of organisation, to which I shall refer 
in a moment. They then declare : 

" This interrelation of functions constitutes a real 
partnership between the persons concerned in any 
business, whether as investors, managers, or work- 
men, or in any two or all of these capacities. At 
present the relation betw^een them is unrecognised 
or only partly understood, and the result is to produce 
hostihty instead of co-operation between the partners." 

The admission of Partnership is expHcit, but is it 
implicit in the proposed organisation ? I wish it 
were ; but let us see. In its simplest form, the new 
machinery is to consist of Joint-Committees, repre- 
senting both Management and Workers. They are to 
be composed of representatives in equal numbers from 
both departments. Either side may bring up for 
discussion questions affecting working methods and 
conditions. Explanations of innovations or the intro- 



duction of new machinery would be called for and must 
be given. Modifications and safeguards may then be 
proposed and differences, as far as possible, adjusted. 
But the wage-system would persist. These Joint-Com- 
mittees are designed for isolated and independent 
concerns. And now, bearing in mind the general 
outlines of Guild organisation sketched in my last 
chapter, it is extremely interesting to follow the pro- 
posals for the staple trades. The Employers' Associa- 
tions and Trade Unions are to join hands and constitute 
a " Supreme Board of Control," divided for practical 
purposes into a " Management Board " and a " Labour 
Board," Representatives of these boards would meet 
on the Supreme Board and deal with all questions 
affecting both parties. But the wage-system would 
persist. And now please remember that I predicated 
in the Guilds democratic election or selection of the 
hierarchy. Did you deem me to be an incorrigible 
optimist ? Then listen to this, written by practical 
business men : 

** In its most ambitious form, the Supreme Board of 
Control would resolve itself into a National Industrial 
Council [rather like a National Guild, don't you 
think ?] for each of the staple industries or groups of 
allied industries. [It makes me suspect that the idea 
came from National Guilds.] The members would 
be elected by ballot, each electoral unit or pair of 
parallel units returning one representative of Manage- 
ment and one of Labour. In many industries it would 
be desirable to find a place on the Council for repre- 
sentatives of the Applied Arts, both with a view to 
raising the standard of design and workmanship, and 



with the object of encouraging the human and creative 
interest in production. [A Guild idea !j A Speaker 
of broad sympathies and experience, capable of direct- 
ing and focusing the discussions upon the practical 
problems to be dealt with, would be chosen by mutual 

Here, then, all unsought, we have all the externals 
of a National Guild and even something of its spirit. 
But the wage-system would persist. Nevertheless, I 
welcome these proposals, and believe, if adopted, they 
raight grow in time into genuine National Guilds. Do 
they not prove up to the hilt the Guildsman's conten- 
tion that some such form of industrial organisation 
has become necessary, not only on economic but also 
on human grounds ? Are they not a tardy admission 
of the dignity of human labour ? 

In all this discussion there is an omission which may 
seem curious : nothing has been said about the inter- 
vention of the State. The business of the Employers* 
Associations we are, however, told must be, inter alia, 
the purchase of raw material " in conjunction with the 
State." But, broadly stated, the Garton writers 
agree with us Guildsmen that industrial autonomy is 
the true line of development. Elsewhere I have 
argued that it is preferable for the State to buy the 
raw material. This function, however, would be 
fought for by the Capitalists, and, of course, the 
National Guilds would insist upon obtaining raw 
materials through their own machinery. 

With this conspectus of modern industry before us, 
the answer to my original question, whether the State 
or the several industries should have shouldered the 



responsibility of supplying war requirements, is easily 
answered. Undoubtedly the industries, had they 
been organised in such a way that Labour had been 
brought into partnership, even as vaguely as the Garton 
writers suggest. I go further : Had there been no 
such organisation in existence, it should have been 
constituted ad hoc. We should then have had larger 
production, no bureaucratic muddling, and all the 
Labour difficulties would have been obviated. There 
is another point to be remembered. When in war, 
prepare for peace. These councils would have become 
the cadres for a peace footing. What I most desire 
to emphasise is that, in war or in peace, thoughtful 
business men agree that Guild organisation is best. 
Indeed, I think they recognise that it is inevitable. 

Having got so far, I think I can hear some of my 
readers say to me : " We have read what you have 
written, only occasionally yawning, and it seems very 
technical ; what we want to know is : Has it such a 
broad application to human life that we can concern 
ourselves with it ? What in it is there to appeal to 
our emotions ? Is our higher life in any way affected ? " 

I answer generally that our emotional life is not 
hermetically sealed against the ordinary facts of daily 
life. When I think in terms of human suffering and 
loss what is involved in the unending grinding of the 
faces of the poor, of their merciless exploitation, of 
their inhuman committal to a market valuation of 
the one thing they possess — their labour — I frankly 
confess that my emotions are touched to pity, to anger, 
to hope, and to a resolute determination to discover 
the cause of such a horrible condition of affairs and to 
remove it. But I would add that hard thinking as 



well as fine feeling must usher in the new epoch. Let 
us first understand the facts, with their thousand im- 
plications, and our emotions will not long lie quiescent. 
Personally, I can do but Httle beyond pointing the 
way. I have already affirmed that it is the workers 
themselves who must work out their own economic 
emancipation. That is true ; but we who are more 
happily circumstanced can prepare the way. I suggest 
two lines of thought and action : by a movement for 
national clarification of function ; by an effort to 
purify education. 

What do I mean by clarification of function ? 
Mainly this : we do not realise that in these later days 
life grows more and more complex, and we try to pour 
all these complexities into the old moulds. Formerly 
everything was done through the agency of the Churches 
or of Parliament. Business we accepted with fatahstic 
indifference, it was merely our means of livelihood ; 
for the rest, Church organisation sufficed for charitable 
and philanthropic objects, whilst poHtics was relegated 
to Parhament. But we have moved into a much 
worse complex order of society, and we find it necessary 
' to call up other agencies to express ourselves. Take, 
for example, the Press. A newspaper lie affects us as 
dangerously as an adulterated food, perhaps as fatally 
as a poison. We accept our papers as we do the 
weather. Beheve me, some serious thinking and 
speaking on the true function of the Press might save 
many a soul from damnation. Before we can reform 
the Press we must first be clear in our minds what its 
function ought to be. But, on larger lines, we must 
discover the tme function of the State before we render 
something to Caesar something that belongs to Pompey. 



Our little inquiry into the meaning and scope of 
National Guilds has taught us, I hope, that there is 
work to be done by corporate action outside the sphere 
of the State. The overwhelming majority of our people 
seem to think that the State can quite properly do 
anything it pleases. Never was there such an urgent 
need for clarification of function. I deliberately use 
*' clarification " and not " definition," which comes 
later. The time has come to state the true proportions 
and relations of our national activities as a condition 
precedent to great organic change. 

In no sphere of activity is function more confused 
than in education. We confuse " education " (really a 
spiritual process) with instruction ; we equally confuse 
the teaching of the humanities with technical training. 
Let me quote these words, written by an ex-teacher 
and present editor : 

" More clearly in our educational system, perhaps, 
than anywhere else are the fruits of this evil relation 
visible (the association of economic with poUtical 
ends, of civic with industrial functions) ; for even while 
we write, the controversy, first begun in the persons 
of Herbert Spencer on the one side, and Matthew 
Arnold on the other, still rages with varying fortunes 
in the direction, at one period and for a little while, 
of a humane and civic ideal, and at another in the 
direction of the technical and scientific. What, we 
are asked for six months of the year, can the end of 
education be but to produce the well-balanced mind, 
the all-round citizen, the man of the world ? And 
what, for the other six months, we are asked, is the 
value to himself or the State of a citizen untrained in 



any craft and unable therefore to employ the complex 
instrument which modern society puts into his 
hands ? " 

Confusion of function again ! Yet it is certain that 
we want good citizens and good craftsmen combined. 
May it not be that here we can learn a lesson from the 
mediaeval Guilds ? They trained apprentices in a way 
they weie never trained before or since. And so, 
by parity of reasoning, may we not affirm that the 
technical and scientific training might and ought to 
be transferred to the National Guilds, whilst the humane 
and civic education remain a function of the State ? 
That is my own solution of that particular problem, 
clearly reached by an analysis of function. I merely 
suggest that extremely fruitful work can be done 
along these lines. 

At the back of these economic and scientific problems 
we shall find a new spirit, calling up a new epoch, in 
which liberty asserts itself in the economic medium. 
A few more years of the wage- system will bring us 
perilously near to the servile State. Those of us who 
realise its true bearing on human life must bestir 
ourselves, each in his own sphere and by the methods 
best known to him. It is the one thing we must do 
if we have felt " the inexorable desire, which whoso 
knoweth shall neither faint nor sleep." 




The Roots of Discontent 

The spiritual and economic tumults of the war have 
quickened the national conscience in many ways — 
notably in a demand, almost universal, for recon- 
struction. Significantly enough, we hear of it more 
from the employing classes — from the less depraved 
profiteers — than from the wage-earners. Recon- 
struction, of course, does not necessarily imply a 
social and economic change foi the better. If my 
income is seriously reduced by some catastrophe, 
I must " reconstruct " my life on more modest lines. 
The change may conduce to my moral welfare, but 
assuredly I neither sought nor desired it. Death and 
destruction may compel us, as a nation, willy-nilly to 
** reconstruct." If this be all that the cry for recon- 
struction means, a timely submission to force majeure, 
then its significance is limited to the material ; it is 
not a cry of the heart. Prudence merely asserts itself 
over principle and religion ; the proud assertion of a 
great national destiny is blunted down to a plaintive 
squeal for national thrift. We have yet to discover 

if these proposals for reconstruction are based on fears 




for the future, or on a genuine passion, stirred by the 
war, for a more equitable system of life. It follows— 
does it not ?— that when various groups and persons 
demand " reconstruction " after the war. we are 
entitled to inquire whether they are motived by 
prudence or by the heroic aspect of reconstruction, 
by a genuinely crusading spirit. 

I do not assert that the two motives are mutually 
exclusive. It is possible that the "Round Table" 
group, for example, might contend that, whilst they 
appreciate and largely endorse an heroic reconstruction, 
tantamount to a mild revolution, the war has put 
us all out of joint, and that, in consequence, there is 
nothing for it but a cycle of thrift based on the per- 
manent hypothesis of wagery. Broadly put, that is 
the assumption underlying the Garton Memorandum ^ 
—a " Round Table " pronouncement, I suspect, and 
about which I shall have much to write. I hasten to 
add that I see no evidence that this and kindred groups 
have as yet ever dreamt that this permanent hypothesis 
is neither tenable nor permanent : that present 
discontent is largely rooted in the exasperating fatuity 
of that hypothesis. Nevertheless, these groups of 
conscientious men, who are not without a sense of 
social compunction, have their uses. They tell us 
how far they are prepared to reconstruct (subject 
to the practice of thrift amongst the working classes) ; 
they frankly admit that the existing industrial 
system cannot now be defended ; that a change is 
imperative. Paragraph 2, for example, of the Garton 
Memorandum : 

1 Memorandum on the Industrial Situation after the War, the 
Garton Foundation. London, Harrison & Sons. is. net, '^j 




" The seeming prosperity of the country during the 
war has obscured the realities of the situation. Be- 
cause the war has not given rise to unemployment 
and the financial crisis which followed on its outbreak 
was successfully tided over, many observers ignore the 
industrial dislocation which has taken place. Because 
there has been a general cessation of disputes between 
Labour and Capital, which has enabled us to concen- 
trate our energies upon the vigorous prosecution of the 
war, they imagine that the problem of industrial unrest 
has in some way been solved." 

Paragraph 5. " Even under the stress of war there 
is ill-feeling, suspicion, and recrimination. Charges 
have been made against each side of placing personal 
and class interests before national welfare, and of using 
the national emergency to snatch present gains and to 
strengthen its strategical position for the resumption of 
industrial hostilities." 

The Memorandum bristles with similar admissions 
that the existing industrial system is both archaic and 
volcanic. Nor does it dare to place the blame ex- 
clusively on Labour. On the contrary, it frankly 
recognises that Labour has many and intolerable 
grievances. I will return to them ; but meantime a 
point of great importance emerges : Under the stiess 
of the war is Capital hardening or relenting towards 
Labour ? Can it be doubted that as war profits 
have accumulated and labour has been diluted. Capital 
has grown more arrogant and assertive ? In the early 
days of the war, a capitalist daily paper printed a 
manifesto calling upon profiteers to desist from profits 
during the war. It was, of course, ignored. But the 



manifesto was a gesture showing a prevalent, if not a 
prevailing, conviction that the exaction of profits (at 
least in war-time) was anti-social. A far cry that from 
Lord Lamington's recent letter in the Times frankly 
advocating the practical suppression of Trade Unions. 
Lord Lamington is not alone. In his, and similar 
circles, the same sentiments are freely uttered over the 
nuts and wine. To give them publicity was an inter- 
esting indiscretion. 

Better evidence, however, is found in " Some Re- 
flections of a Soldier " (Nation, 21st October 1916). 
He has come home again. He finds that the values 
have all changed — so changed, indeed, that he doubts 
if he is really at home. He feels " like a visitor 
amongst strangers whose intentions are kindly, but 
whose modes of thought I neither altogether under- 
stand nor altogether approve." He and other soldiers 
went out to fight for an idea ; he comes back to 
find quite other ideas predominant. " You speak 
lightly, you assume that we shall speak lightly, of 
things, emotions, states of mind, human relationships, 
and affairs which are to us solemn or terrible. You 
seem ashamed, as if they were a kind of weakness, of 
the ideas which sent us to France, and for which 
thousands of sons and lovers have died. You calculate 
the profits to be derived from * War after the War,' as 
though the unspeakable agonies of the Somme were an 
item in a commercial proposition. You make us feel 
that the country to which we've returned is not the 
country for which we went out to fight ! " Not for the 
first time in our history, the army and the country 
have drifted apart. Our soldiers have toiled and moiled 
for Rachel ; on their return, they are asked to contem- 



plate the faded charms of Leah. " While you seem — 
forgive me if I am rude — to have been surrendering 
your creeds with the nervous facility of a Tudor official, 
our foreground may be different, but^our background 
is the same. It is that oflAugust to^November 1914. 
We are your ghosts." 

I shall show, in a moment, that this soldier knows 
of what he writes. But can we read these wc-c s with- 
out shame and emotion ? — " They carry their burden 
with little help from you. For an army does not live 
by munitions alone, but also by fellowship in a moral 
idea or purpose. And that you cannot give us. You 
cannot give it us because you do not possess it. You 
are, I see, more divided in soul than you were when 
I became a soldier, denouncing the apostles of war, 
yet not altogether disinclined to believe that war is an 
exalting thing, half implying that our cause is the 
cause of humanity in general and democracy in par- 
ticular, yet not daring boldly to say so, lest later you 
should be compelled to fulftl your vows, more com- 
placent and self-sufficient in proportion as you grow 
more confident of victory and have less need of other 
nations, trusting more in the great machine which you 
have created and less in the unseen forces which, if 
you will let them, will work on your side." 

Poor soldier-man ! He believed in our statesmen's 
proclamation that we were fighting for democracy. He 
had a simple faith that divine forces were shaping our 
ends. He returns to find that we are afraid to register 
any vows lest peradventure we may be called upon to 
fulfil them. We are, instead, calculating our profits 
from the war after the war. 

Can it be true, however, that the army is still think- 




ing in terms of 19 14 ? Can it be true that we are 
already calculating our future profits ? Let us return 
to the less imaginative Garton Memorandum. Please 
remember that in 1914 industrial Labour was asserting 
itself in inverse ratio as political Labour was degrad- 
ing itself. Paragraph 6 : 

" There is evidence that many of the men who return 
from the trenches to the great munition and ship- 
building centres are, within a few weeks of their 
return, amongst those who exhibit most actively their 
discontent with present conditions. Among those 
who have fought in Flanders, or have been employed 
in making shells at home, there are many who look 
forward to a great social upheaval following the war. 
To some this may be distressing and almost incredible. 
The facts remain, and the facts must be faced." 

Why distressing ? Why incredible ? These men 
believed in and fought for democracy — economic 
democracy. It rather looks as though the discontent of 
1912-1914 will be accentuated by the war ; that the 
army really believed in democracy, and, on its return, 
means to have it. 

But about the profits out of that glorious " war after 
the war." Our " Round Table " friends have distinct 
commercial aptitude. Paragraph 21 : 

" In the devastated districts of Belgium, France, and 
Poland reconstruction on a big scale will be necessary. 
Roads, bridges, railways, factories, machinery, houses, 
churches will have to be reconstructed or replaced. 
In this work our foundries and factories will find their 



The hungry profiteers (who doubtless are pray- 
ing for more and yet more destruction) are to 
be let loose over the devastated areas; the per- 
manent hypothesis is to be yet more firmly estab- 
lished ; and the writers of the Crarton Memorandum 
to prove themselves equally devoid of shame and good 
taste. I do not exaggerate ; the economic theory is 
quite clearly stated. Present prosperity is artificial 
and transient. It is due, in part, " to the teinporary 
absorption into industry of people who will not continue 
to he producers after the war.'' It is due, in part, to 
" the inflation of currency and the concentration of 
purchasing power in the hands of the State, which has 
not to study the absorptive power of commercial 
markets for the disposal of its purchases, but uses them 
to destruction as fast as they are produced." After 
the war, we are again to lapse into the " normal 
conditions" of supply and demand. No nonsense 
about that ! No State could possibly study the 
*' absorptive power" of a demand for sugar or corn 
or foodstuffs or coal or cotton. No National Guild 
could do it. That is peculiarly the task of the profiteer • 
He knows ; nobody else does. Besides — this is the 
vital point — if the National Guilds, producing and 
purchasing, were to supplant the profiteers, the 
permanent hypothesis (that the labour commodity 
must also readjust itself to supply and demand) would 
go by the board. 

Think of it ! If the Guilds came in, they might 
comfort and repair the desolation of Belgium, Poland, 
and Servia without a penny of profit ! They might 
even leave Guilds behind them. If this happened, 
the war would indeed be a Pyrrhic affair. Let 



us have no new-fangled notions ; let us pursue the 
way of our fathers — the State to control destruc- 
tion, the profiteer to control production. As for 
" democracy " — pish ! The *' unseen forces " — tush ! 
Luckily we may take heart of grace. This soldier, 
with his inconvenient conscience, returns to the 
front ; Sir John Jackson remains at home. 

I think we can now gHmpse the soil in which the 
roots of discontent grow and flourish. Our soldier 
tells us that a cultured civiHan explained to him that 
his feelings were not shared by the " common soldier " ; 
that they were confined to " gentlemen." This 
misconception has prevailed amongst the governing 
classes since the days of Epictetus and Christ, whom 
" the common people heard gladly." It is the assump- 
tion that property possesses a special spiritual warrant. 
Every generation proves it to be grotesquely false ; 
every generation clings to it as faithfully as to the per- 
manent hypothesis. Yet who is there who has lived 
amongst them who will not agree that a larger pro- 
portion of the oppressed are gifted with greater spiritual 
perception than their oppressors ? Does the point 
seem remote ? It is entirely germane. For spiritual 
perception precedes an understanding of social and 
economic problems. This soldier's words are pene- 
trated with it ; he accordingly writes with power and 
distinction. The writers of this Memorandum are 
spiritually blind, and so their words are hollow. They 
may retort that they are not concerned with ethics. 

Assuredly they cannot escape from some kind of 
ethical standpoint. Are there no canons of right 
conduct, no sense of dignity and seemliness, in the 
workshop and counting-house ? But our writers 



understand that ethical considerations necessarily 
arise. The repudiation of the national debt is raised. 
" Anything amounting to even partial repudiation or 
to adverse discrimination between holders of war-loan 
and of other securities would be unjust, dishonourable, 
and disastrous." Next we come to status. " The 
great obstacle to co-operation is the question of status. 
The ill-will of Labour towards Capital and Manage- 
ment is not wholly a question of their respective share 
of earnings. Friction arising over the distribution of 
earnings is in itself due quite as much to a sense of 
injustice in the machinery of distribution as to the 
desire for actual increase of wages." Our propaganda 
begins to tell. More ! These writers understand that 
status hinges on the conception of labour as a com- 
modity. They say so : " The worker feels that his 
labour is treated as a mere commodity, the market 
value of which may be forced down by the Employer, 
irrespective of any consideration of a decent standard 
of life for the Employed." Clearly this is an ethical 
(or, as our writers put it, a " non-economic ") aspect of 

Why, then, do I assert that the writers are spiritually 
blind ? Here is a vital point, urged by The New 
Age for a decade or more, quite frankly faced and 
admitted. What more do I want ? It was said of 
some statesman that he " boldly faced the difficulty— 
and passed on." This Memorandum does precisely 
the same thing. Do its writers admit or deny that, 
economically or socially considered, labour is, in fact, 
a commodity ? They merely tell us that it is so 
asserted— and pass on. Now, they must surely realise 
that here is the crux of the whole problem. They 




ought to know that the new school passionately rejects 
the theory that labour is a commodity. If they do 
not, let them read a book entitled National Guilds. 
If labour really is a commodity (as the classical 
economists assert), why waste ink and paper on the 
problem of status ? For it is certain that, so long 
as it is economically, or socially, or spiritually, con- 
sidered to be a commodity, its statiis is exactly that of 
manure. In other terms, we have achieved the servile 
state. Wagery and slavery have met and merged. 
On the other hand, if labour is essentially a human 
element, both in production and distribution, then 
we are faced with a new fact that must dominate every 
scheme of reconstruction. If our writers do not under 
stand this, then they are obtuse ; if they do under- 
stand it, and decline to follow its implications, they 
are obviously insincere. In either alternative, they 
are spiritually bUnd. I assure them that sooner or 
later they will be found out. 

I cannot resist the conclusion that the self-com- 
placency with which they clothe this aspect of the 
question must, in itself, prove a prolific source of 
discontent. They are like the editor of the Spectator, 
who has carried self-complacency to the giddy heights 
of spiritual cowardice, or hke the Webb group of 
bureaucrats, who tell us that the way of salvation is 
research and yet again research ; who bury the funda- 
mental facts under a cairn of statistics. We ask for 
genuine reconstruction founded upon the new con- 
ception of labour as a sanctified human factor ; w^e 
get an evasion of the cardinal fact, and are offered 
workshop control plus an industrial national council, 
which would not trench upon the functions of Em- 



ployers' Associations, who are still to profiteer to their 
hearts' content. Does it not make serious thinkers 
furious ? 

I offer no apology for emphasising the religious or 
spiritual aspect of reconstruction. I am old-fashioned 
enough to believe that we cannot reconstruct (and by 
" reconstruct " I do not mean " to patch ") without a 
religious impulse. It does not suffice merely to collate 
the facts— any callow undergraduate could do that— 
to present an olla podrida of unrelated problems of 
widely different values and significance. We are 
entitled to ask the " Round Table " group what they 
really believe ; at what altar they worship. 

If, however, ethical considerations must be ruled 
out, if imagination and spiritual insight are de trop, 
we can easily discover other roots of discontent of 
a more specifically material order. Apart from the 
thousand and one grievances inherent in the wage- 
system— grievances that are the staple food of the 
Trade Unions— the great underlying element of dis- 
content is found in the fact that poHtical democracy 
is a mirage because it is not correlated with economic 
democracy. Unless we understand this, we shall never 
grasp the essentials of reconstruction. The main 
proposals in this Memorandum are doomed to failure 
because they dehberately refuse economic democracy. 
They do worse ; they make a pretence of it. The 
members of the Supreme Board of Control are to be 
elected by ballot, "each electoral unit or pair of 
parallel units returning one representative of Manage- 
ment and one of Labour." But! " Such Industrial 
Councils would in no sense supersede the existing 
Employers' Associations and Trade Unions, many 



sides of whose present activities would be unaffected 
by the creation of the new. bodies. Matters con- 
nected with the sources and supply of raw material 
and the cultivation of markets for the disposal of the 
finished products would remain exclusively the con- 
cern of purely commercial federations of manu- 
facturers, acting in conjunction with the State." As 
if they were not acting in conjunction with the btate 
already! Where have the "Round Table" writers 
been hiding all these years ? To make a pretence of 
economic democracy, with its voting by ballot, its 
" Speaker" and all the rest of its poUtical gear, and 
then to reserve the substance for the Employers 
Association, is to court not merely a storm of derision, 
but to incite to anger the workers whom they set 
out to placate— or to deceive. 

With a new Britain looming up before us, the 
question may well be asked : " Why not an economic 
democracy without more ado ? The answer is absurdly 
simple : Because the permanent hypothesis, with its 
bar sinister, blocks the way ; because our capitalists, 
with their following of scribes and pharisees, are deter- 
mined to maintain and retain labour as a commodity 
In consequence, we find industrial discontent rooted 
in the considered determination of the possessing classes 
to yield nothing that is conferred upon them by the 
permanent hypothesis. I can easily understand that 
the Trustees of the Garton Foundation (Mr. Balfour, 
Viscount Esher, and Sir Richard Garton) very readily 
" permitted the devotion of its staff and resources to 
this work." 




Quo Vadis ? 

Whilst proletarian discontent is rooted in the intan- 
gible tyranny of the permanent hypothesis, it by no 
means follows that there are not other discontents 
springing from intellectual disquietude. The intel- 
lectuals have shown their dislike of the existing system 
and denounced it in polite terms. The Fabian Society, 
for example, is busy discussing " The World in Chains "' 
(evening dress optional and a paltry one guinea the 
course, numbered and reserved stalls, Dr. Saleeby the 
first chairman), in which great thought (led by Sir 
George Radford, M.P.) is devoted to the problem how 
to enlarge our freedom without breaking the chains. 1'^*'' 
If the chains were broken, where would those guineas 
come from ? It is indeed a sign of the times when 
such a respectable and cautious body of social students 
wakes up to the existence of chains. Men with a 
stake in the country need, however, have no fear. Mr 
Webb's syllabus is reassuring: "The individual is 
always m chains, and is not necessarily either the less 
happy or the more cramped in his development because 
of the limitations of which he is conscious. ' ' The manual 




worker's chains gall rather much — we really must admit 
it — *' (a) by his poverty ; (b) by his limited mental 
development and by ignorance ; and (c) by the condi- 
tion of his employment." It seems a little dangerous 
to drag in this third item, but in war-time one must 
take risks. After all, it is only a verbal admission. 
The cure ? " The unexpected profitableness of enforc- 
ing a National Minimum of Civilised Life. The unfore- 
seen freedom of national service. Will our governing 
class have the good manners to choose equality ? " 
Mr. Sidney Webb's thoughts go back with love and 
longing to 1880. 

Personally, I am not disposed to bend the knee 
to the governing class and pray that, in their 
strength and mercy, they will give us equality. But 
Mr. Webb's vision is only slightly blurred by the 
governing classes' oft-iterated intention to stay where 
they are just as long as the permanent hypothesis 
permits. His heart is in " the unforeseen freedom of 
national service," when we shall all, con amore, obey 
those good and kindly bureaucrats, who will go to him 
in all their perplexities. Chains ? Oh yes ; but 
polished to a beautiful smoothness and engraved with 
Shavian epigrams. 

That studious pundit, Mr. Graham Wallas, also 
contributes to the discussion. Let me pluck a 
flower or two from his bouquet : " Success in the 
development of a democratic State depends first on 
its political machinery." He apparently has never 
heard that economic power precedes political action 
and dictates its form. He proceeds : " The success 
of a democratic State depends secondly upon the 
existence of certain habits of mind among its citizens." 



A mind that readily adapts itself to the permanent 
hypothesis. His conclusion reads : " Democracy, 
therefore, depends for its success on the temper of its 
schools and universities and churches, its Trade Unions, 
and learned societies and families as much as on the 
ingenuity of its political machinery or the patriotism 
of its politicians." Not a word about wagery. Hush ! 
We must not obtrude such a \ailgar word upon the 
startled consciousness of the delicately abstract. 

If the Fabian Society discloses no new tendency, fails 
to '* embrace the purpose of God and the doom as- 
signed," others, more alert, realise that the war has 
changed our life. Two crusading twins in the Times, 
writing as " D. P.," have developed their views with 
a certain picturesque clearness. Their argument can 
be shortly stated. Their main premiss is that British 
industry must more generously call science to its aid. 
And science can only adequately act its role in spacious 
ways. The day of the hundred thousand pound com- 
pany is gone for ever ; in the future we must think in 
millions. The old petty competition must give way to 
a large integrated co-operation. The small company 
cannot profitably employ a platoon of chemists and 
other specialists ; that is the responsibility of the 
large millionaire concerns. But where are these 
chemists to be found ? Unhappily we have not got 
them in sufficiently large numbers. Sir Ray Lan- 
kester blames the Civil Service. He contends that it 
has given an unfair bias towards the old classical side 
by overmarking Greek and Latin and undermarking 
science. In consequence clever and ambitious boys 
are drawn to the classics, and the modern side is pro 
rata impoverished. Personally, I am very glad it is 



so ; we want science in our industrial work (using the 
word in its broadest meaning), and the humanities in 
our administration. 

I fancy " D. P." rather agrees with me, for his 
(or their) argument really leads to the conclusion 
that our great industrial concerns must train their 
own chemists. I shall show, later on, that this is 
the true line of development. But let me quote : 
" In this time of reconstruction there are two entirely 
divergent ways in \\'hich the new education may 
develop : one leading straight to Britain's last muddle, 
and the other to an Imperial renascence. The 
first is the traditional method, planless, incoherent, 
wildly wasteful. It begins in a tangle of agitating 
bodies, committees and organisations ; it goes on to 
much zeal, more anger, storms of blame, scraps of fine 
performance. ..." We all know the process, so I 
need not quote further. " The second is a replanning 
of scientific education and research, concurrently with, 
and as a part of, a systematic amalgamation and co- 
ordination of industries, so that the same men who 
plan the plant may have a decisive voice in the educa- 
tion of the men who will work the plant." But this 
co-ordination carries us a great deal further. It means 
that the trained expert is at last to bear his true share 
in management. No wonder the writers declare that 
" the experiment of controlled establishments, the 
experiences of trusts and combines, German State 
Socialism, the theories of Guild SociaHsm, are all in the 

These two critics have reaHsed that not only do we 
want industry on a much larger scale, but it must 
be " quasi-nationalised." Having reached this con- 




elusion, a weak dilution of the theories propounded 
by national guildsmen, we are next exhorted to snub 
them. " Let us by all means continue to snub them, 
take it out of them socially, and so on, but let us at least 
see whether some use is not to be made of their ideas. 
These new ideas among the workers need not make 
for conflict, but they certainly will make for conflict 
if they are ignored." We shall not be ignored, and we 
cannot be snubbed ; but the argument is to me ex- 
tremely interesting, for it coincides with what was 
written in The New Age in 1912 and 1913. We 
were then denounced as Utopian. Time has proved 
that ours was the true vision. 

There is a suspicious similarity "between the thesis of 
" D. P." and the proposals embodied in the Garton 
Memorandum. It is only a step from the closer 
association of the skilled man in management to work- 
shop control ; but I am cone erned for the moment with 
technical education and research. Paragraph 108 : 

" For industrial purposes research may be 
classified under two headings — Theoretical Research 
of a general nature, having no obvious and immediate 
practical application, and Specific Research directed to 
the solution of definite problems of production. . . . 
The encouragement of Theoretical Research, which 
may yield results of national utility, is a proper object 
for State action. Specific Research, the results of 
which will be capable of immediate commercial educa- 
tion, can best be carried on in close connection with 
the industries concerned." 

So far, again, this and the Guild proposals are in 
haiTnony. But the Memorandum proceeds to urge the 



Employers' Associations to subsidise Technical Colleges 
or Municipal Laboratories in the leading centres of 
industry. " Such subsidies might even be extended 
to research of a more general character, in any field 
touching the materials and processes of the industry 
in question. The results obtained by the scientific 
experts could then be submitted to the staffs of works 
laboratories, who would at once recognise the com- 
mercial possibiHties which they might hold, and could 
refer them back for specific research along the lines 
indicated by their practical knowledge and experience " 

My immediate purpose is not to discuss scientific 
research or technical education, but to ascertain the 
true mind of the reconstructionists, to sense out the 
real tendency of their proposals. This tendency 
expresses itself crudely in the more concrete question 
of wages and labour organisation and more subtly in 
such a problem as education. Let us look, then, at 
the inner meaning of these proposals. In the first 
place, the Employers' Associations are to pay for 
scientific research, either directly or by subsidy. 
That being so, it follows that they shall direct and 
control all specific scientific research. The workers 
who do research have only to follow the lines laid 
down by their masters. 

It does not require much imagination to see the 
result. Scientific research is harnessed to the per- 
manent hypothesis ; it is removed from pure science 
and becomes a process in profiteering. Science is 
cornered and becomes a capitalistic monopoly. Sup- 
pose some clever researcher discovers something that 
would render superfluous one of the employers' 
most profitable products ? A discovery may easily 



prove of untold economic value and yet cause great 
commercial loss. I need hardly remind the Garton 
writers that economic and commercial values are by 
no means identical. Sooner or later, the workers 
will understand that it is to their own interest to 
keep a firm grip on science and technical training. 
Secondly, it is proposed to utilise Technical Colleges 
and Municipal Laboratories for commercial ends. The 
writers go further ; they would penetrate the Univer- 
sities : — " A University should not only be a training- 
ground for the recognised professions, but a centre 
of research in connection with the industries of the 
country." It is high time that a new spirit descended 
upon our universities, but the Birmingham model is 
best avoided. 

The truth is that these reconstructionists have not 
thought out their problem. The permanent hy]:)othesis 
obfuscates while it enriches ; it entices to deceive. The 
possessing classes rely upon wagery, not only to secure 
to them all surplus \'alue, but to yield them sovereignty 
over mankind's mind and conscience. It is to them 
natural and appropriate that they should control 
education. In elementary education, Whitehall does 
it for them (under the guise of democracy) ; secondary, 
technical and university education is their private 
preserve by the simple process of paying lor it. Yet 
the essence of education is that it shall be free ; that 
it shall not be " in chains." The Garton Memorandum 
demands a free, self-respecting, intellectually and 
technically educated proletariat, but fails to under- 
stand that this is only possible when the workers pay 
for their own education and training — and control it. 
Can we doubt that a curriculum demanded by the 



workers out of their own experience >nd aspirations 
would diverge widely trombone imposed from above ? 
We may cordially admit that these Garton proposals 
are made in good faith and with high expectations, 
but blinded by the permanent hypothesis, they fatally 
disregard the psychology of the workman. 

How, then, do we, as Guildsmen, differ jfrom the 
Garton Memorandum and the Times correspondents ? 

The answer is to be found in our conception of the 
functions of the State and the Guilds. To the Guilds 
we would transfer every economic activity, subject to 
the grant of a State charter in exchange for the equiva- 
lent of economic rent. To the State we assign the 
purely poHtical work, which, rightly understood, is to 
interpret the spiritual and intellectual mind of the 
nation. May I quote from National Guilds ? ^ 

** The problem, then, of the Modern State is to give 
free play in their appropriate environment to the 
economic and poHtical forces respectively. We have 
seen that they do not coalesce ; that where they are 
intermixed, they not only tend to nullify each other, 
but to adulterate those finer passions and ambitions 
of mankind that ought properly to find expression and 
satisfaction in the political sphere. It is a quality 
inherent in private capitalism to dominate and mould 
State policy to its own ends, precisely as it exploits 
labour. If the interests of private capitalism were 
synonymous with those of the community as a whole, 
this danger might be theoretical rather than real. 
But we know that the assumption of unity of interest 
between private capitalism and the State degrades 

^ National Guilds, p. 258. 




the standard of national life and stifles all aspirations 
towards that spiritual influence which is the true 
mark of national greatness." 

In the succeeding chapter, education is correlated 
with these political and economic functions : 

" But if this apportionment of the duties, as between 
the State, as a whole, and the Guilds as autonomous 
but limited functions of itself, is possible, the same 
principle carried into the sphere of education would 
equally well determine the relative provinces of civic 
and technical education. For it is plain that as duly 
authorised and charged with the responsibility of skilled 
industry, the Guilds at the same time would become 
responsible for the technical training necessary in 
each of their crafts. And while they would thus be 
responsible for technical training as such, the State, 
as a whole, would have the duty of civic education 
in general." ^ 

Reasoning from a sound premiss that rejects the 
permanent hypothesis that labour is a commodity and 
sees in the Guilds the inevitable structure of society 
that protects labour from the degradation of the 
commodity theory, we instantly find a true and practic- 
able solution not only of education but of a host of 
other perplexing ailments in the body poUtic. No 
other scheme of life, so far as I know, is adequate to 
the task. Until, therefore, some more reasonable 
theory supplants us, we can only test the validity of 
present proposals as they approximate to our creed. 

Outside our own school, what, then, is the tendency 

^ National Guilds, p. 205. 



and drift of the various proposals sprung to life 
out of the war ? Is it not evident that they all 
betray anxiety as to the spirit and temper of Labour 
and a distinct willingness to raise its status ? The 
current vocabulary affords some guide to the trend 
of thought. President Wilson recently, in good round 
terms, condemned the conception of labour as a 
commodity. The Garton Memorandum mentions the 
theory without condemning it. It is clearly in the 
air. I think we may claim to have made distinct 
progress, for nobody thought of it, let alone mentioned 
it, before National Guilds was written^PJ And just 
as we embraced the whole scheme of autonomous 
labour, so now others are coming at it by easy stages. 
From every quarter admissions are freely made that 
labour must have much greater control over its own 
life in the workshop. When these concessions are 
spontaneously offered by the employers, it is not for 
us to accept them with whispering humbleness. On 
the contrary, if that be the employers' minimum. 
Labour must demand the maximum. 



The New Social Contract 

The evidence already quoted proves, I think, that as a 
people we have finally rejected the old conception that 
Labour's business is to obey without question, criticism, 
or dissent. Industrial policy has been influenced, if 
not penetrated, by new social conditions, predicating 
a new status for the practical workers in every sphere 
of economic life. The recognition is now general, 
indeed, almost universal, that Labour has won 
through to some form of partnership with the possess- 
ing classes. The deed of partnership has not yet 
been signed; its clauses have not been discussed; 
its purport is admitted but not defined. When the 
parties to the bond meet to agree, it will be found that 
their agreement is general rather than specific ; that, 
in the final analysis, no harmony can be reached until 
the permanent hypothesis is abandoned. The danger 
lurking in the immediate posture of affairs is that, 
whilst the present possessors will at great hazard adhere 
to that hypothesis, Labour has yet to learn and under- 
stand in principle and detail why and how it-is an im- 
posture. Nevertheless, it is surely the opening of a 




new epoch when we turn our backs upon the old S5rstem. 
Not that as yet we have travelled much beyond it. 
The most we can say is that Labour can no longer be 
excluded from a voice in industrial policy ; but the 
weight to be attached to it has yet to be considered. 
Without doubt Labour has great weight ; has it the 
strength to impose it ? Can it pass from the " passive " 
to the " active " ? Has it the intellectual and moral 
power ? 

Pondering these epochal issues, I reach a point in 
the argument where purely economic considerations 
prove inadequate. For how can we assess the means 
of life without a prior valuation of life itself ? Here 
we hit upon a spiritual hiatus in English life. We have 
developed the cult of the ''practical " to such excess 
that it has become a national sin. We have accumu- 
lated untold wealth, giving our minds and hearts to it, 
with the most sketchy and illusory ideas how rightly 
to spend it— or, in other words, how to live. It needs 
only a detached view of English life— English rather 
than British— to realise this. There is, to-day, no 
corporate life in England. It is broken up, as though 
by a volcano, into isolated surfaces and gaping fissures, 
across which the sundered inhabitants signal to each 
other, sometimes in terms of hatred, invariably in terms 
that are misunderstood. A not surprising result, 
when we remember that on these islets within the 
island the several populations live a different life and 
speak a different language. The isolation is not only 
physical ; it is mental and moral. So widely separated 
are these groups that intermarriage is regarded as a 
degraded exogamy ; they maintain their own dis- 
tinctive schools of writers, preachers, and moralists; 


each ignores the ideas, ambitions, and faiths of the 


The war, we are told, has induced at least a tem- 
porary unity ; but no harmony in our national life is 
conceivable until these fissures have been bridged and 
a spiritual and material coalesence achieved. And 
that ultimately depends upon our national sense of the 
dignity and purpose of life. Now the foundation of 
dignity is self-respect. The moral difficulty that con- 
fronts us is that the permanent hypothesis destroys 
the self-respect of Labour, compelling it not only to 
value itself on a commodity basis, but to acquiesce 
in the morality of its masters. Is it not evident that, 
before Labour can make its weight felt in the new social 
contract, it must evolve a new conception of the life 
to which it aspires ? In my own experience, duiing 
the last thirty years, just as the permanent hypothesis 
was the economic obstacle to any substantial advance, 
the spiritual obstacle has been a furtive admiration of 
capitalistic morality. 

If we approach the new condition of affairs in an 
ethical spirit (so far as it can be disentangled from the 
economic), it seems clear that there is a vital essence 
which must be implicit in the contract. Freedom ! For 
just as dignity is built upon self-respect, so, in its turn, 
self-respect is the offspring of liberty. I can afford to 
wait patiently for the time of awakening when the 
permanent hypothesis and freedom shall be found to 
be incompatible. It must inevitably come when we 
reach the detailed discussion of the new social contract. 

In this connection it is worth noting that we can rely 
upon reinforcements. Decade after decade, all through 
the century that has developed wagery, an apostolate 



of freedom has passed on its flickering and tormented 
torch. If it has rarely burst into celestial radiance 
(once, perhaps, in the days of Mazzini), it has always 
proclaimed that freedom is greater than all else in our 
national life — freedom to speak and write, freedom to 
live in such wise that we may realise the divine within 
us. It was the inspiration of the Chartists ; it lighted 
the path of the early radicals ; it was the heirloom of 
the Nonconformist Churches (who but dimly under- 
stood it, yet vaguely invoked it) ; the manufacturers 
pressed it into service, seeking to kill the feudalism that 
thwarted their ambitions. It is one of history's grim 
jests that this apostolate linked itself to the economic 
system that to-day enslaves mankind by the sanction 
of its permanent hypothesis. If we regard, with what 
sympathy we can, the predicament of the living 
apostles of this cult — Mr. Massingham is its arch- 
priest — we find them in tragic perplexity. They 
still want freedom more than riches ; they are dis- 
covering that freedom is a vain thing without econo- 
mic power. They have at length discovered that 
*' socicd reform " is but a stage in capitalistic develop- 
ment, a phase of economic enslavement. I am not 
without hope that the war's upheaval will throw them 
out of their old entrenchments, and show them the 
true direction to point their guns. For myself, I would 
welcome their adhesion to the new doctrine that it is 
only by rejecting the tyrannous theory that labour is 
a commodity that freedom can be won. We who have 
pioneered it know what it means to live solitary in the 
desert ; and Labour, never more than now, wants 
disinterested intellectual support. 
What is here written as to the cardinal importance of 


a prior valuation of life and the existence of a spirit 
of freedom (as yet unconscious of its vital relation to 
economic life) will not, I hope, be deemed irrelevant 
to our consideration of the new social contract. Both 
aspects are essential. For it is not by legal enact- 
ment, but by the unseen forces, emanating from the 
social conscience, that the new regime will become 
a living fact. In an age of legalism, we are apt to forget 
that every great revolution preceded established law, 
only by slow and painful stages, and out of experience, 
inscribing itself on the statute book. We can only 
appreciate the strength and meaning of a new order of 
society by taking stock of all the factors i)y which it 
conquered. The factors to be conciliated by the new 
social contract are [a) a more or less blind revolt against 
degrading conditions ; [h) the imperative necessity of 
a more scientific and efficient system of production ; 
(c) the call for a higher spiritual and moral life ; and 
{d) a revivified passion for freedom. The statute 
law may regulate, in greater or less degree, conditions 
arising out of the contract, but it is a magna charta 
not written by hands and only realised in the spirit. 

But that is true also of the existing system. We 
do not live by written law, but by tradition and senti- 
ment. The statute book, with its imposing array of 
factory laws and regulations, barely touches us ; we 
resort to it only that we may test how far custom has 
embodied itself in law. " Good form," in some walks 
of life, is a more potent agency in conduct than law ; 
habit and custom rule our goings and our comings. 
In the relations between employers and employed, no 
doubt law, if called upon, can lay its heavy hand upon 
Labour, with its subtle renderings of " conspiracy " 



and " restraint of trade," but, in general, industry is 
regulated by " the custom of the trade " and by the 
non-legal policy of compelling Labour to obey by the 
alternative of starvation. Even amongst themselves 
there is a well-understood convention that employers 
shall not push their legal rights or unduly exert their 
economic power against their employees to the em- 
barrassment of their colleagues or to the danger-point 
of an explosion. The Bishop of Winchester puts it 
clearly enough in a letter to the Times. Defining 
" profiteerers " as men whose absorbing thought is on 
the dividend, and that alone, he remarks that it is 
** all-important to know whether capital, Hke other 
interests and faculties, has power to control its own 
black sheep." In like manner, it is equally important 
that we shall know whether Labour has power to 
control its own blacklegs. 

Important though it be that we should rightly 
appraise the comparative remoteness of Parliamentary 
law from the birth and completion of the new social 
contract, nobody is quicker than the accomplished 
lawyer to seize the significance of new tendencies and 
movements. Lord Wrenbury, for example, who is 
probably our greatest living lawyer. He has noted 
that the old social contract has been dissolved by the 
war. Employers and employed, he tells us, will return 
from the war, their views of each other profoundly 
changed. Our industrial system must change with it. 
Lord Wrenbury now sees the imperative need to con- 
fer upon Labour a new status. " For every relevant 
purpose every labourer is a capitaUst and every capital- 
ist is a labourer." He puts the new conception of 
Labour with characteristic force : " The skill of the 



labourer, which he has acquired by years of practice, 
his habits of industry, his tools, and so on, are as much 
capital as are the accumulated funds of the capitaHst. 
Even the dock labourer, who brings little more than 
muscular strength, equally brings that in as his 
capital." He condemns the Trade Unions for limiting 
production (which shows he has yet much to learn), 
and then afftrm.s that increase of production is in- 
crease of wealth (which shows he has yet much to learn), 
and that " as wealth increases the comfort of every 
member of the community must in the long-run in- 
crease " (which shows he has yet much to learn). 
" The labourer, liowever, insists, and not, I think, 
unreasonably, that he wants presently and at once to 
see distribution made upon terms which seem to him 
more equitable." Clearly a change of status, for 
hitherto distribution has been the exclusive function 
of the employer. 

Lord Wrenbury now^ ponders the possible terms of 
the new social contract. Still obsessed by the perma- 
nent hypothesis, he naturally accepts the continuance 
of the capitalist as such. He sees, however, a grave 
lack of harmonious action between capitalist and 
labourer (even though, ex hypothesi, the labourer is 
a capitalist too). Why ? " Principally because while 
both employer and employed contribute to production, 
the thing produced belongs to the employer to the exclusion 
of the employed. This fact lies at the root of all in- 
dustrial discontent." Can it be possible that Lord 
Wrenbury has glanced at page 75 of National Guilds ? 

" The fundamental fact, common to every kind of 
wage, is the absolute sale of the labour commodity, 



which thereby passes from the seller to the buyer and 
becomes the buyer's exclusive property. This absolute 
sale conveys to the buyer absolute possession and con- 
trol of the products of the purchased labour com- 
modity, and estops the seller of the labour commodity 
from any claim upon the surplus value created or any 
claim upon the conduct of the industry. The wage- 
earner's one function is to supply labour power at the 
market price. That once accompHshed, he is economi- 
cally of no further consideration.'* 

Lord Wrenbury, whilst admitting the truth of our 
statement, is greatly distressed about it. He wants to 
square the circle : " That man will have solved the 
problem who finds the way to give the employed upon 
commercial principles a share and interest in the thing 
produced." Need I assure Lord Wrenbury that, inside 
the ambit of the wage-system, that problem can never 
be solved ? He has rejected the old idea of a submis- 
sive proletariat, but he cannot understand (blinded by 
the permanent hypothesis) that '' a share and interest 
in the thing produced " is the negation of capitaHst 
exploitation, with the resultant rejection of " com- 
mercial principles." Let me remind Lord Wrenbury 
of a factor he has omitted. He wants to give the 
" employed " a share of the thing produced " upon 
commercial principles" ; he completely forgets that 
it can only be produced " upon commercial principles " 
with the passive co-operation, yet effectual help, of the 
unemployed. Is he prepared to give, " upon com- 
mercial principles," a share and interest in the thing 
produced to the unemployed ? 

I think we can now perceive that, whilst the old 


social contract has been torn to shreds by the war, 
whilst such writers as " D. P.," the Garton Researchers, 
and a great lawyer hke Lord Wrenbury are agreed that 
a new social contract must be framed, they have not 
as yet hit upon the formula to guide them. They can 
only see, in a greatly accelerated production, economic 
restitution after war's ravages. To that end, they are 
prepared to concede to Labour a new status, and, in 
some way not yet evolved, more liberal remuneration. 
Undoubtedly, they have been touched by the human 
issues of the war, perhaps grasping the possibility of 
trench camaraderie being ultimately transmuted into 
economic fellow^ship. But their imagination boggles 
at the plain fact that enduring fellowship is impossible 
when founded on a false relationship. There can be 
no fellowship between men whilst a small minority 
regards the labour of the majority as a commodity. 
Disguise it as they may, let them refer to it never 
so discreetly, it is this lie of the century that divides 
the nation ; that will continue to divide it until we 
indignantly reject it with a moral passion supported 
by the logic of economic facts. 

The distinguished lawyer whom I have quoted has 
gone to the root of the problem with his deadly query — 
who really ought to possess the finished ^ product ? 
But he, like all the others, cannot see (blinded by 
the permanent hypothesis) that, as the new social con- 
tract is established, so-called " commercial principles " 
become obsolete. For the essence of these commercial 
principles is the buying and selling of commodities, 
of which the most important is labour. 

I have emphasised the spiritual and social signifi- 
cance of the new contract, because on examination it 



is found to involve a change of heart— a revolution in 
all our ways— our way of thinking, our way of acting, 
our way of faith. Inevitably so, because the mass of 
mankind shall have mounted to a higher plane, trans- 
forming in its course our whole conception of economic 
life, of " commercial principles," of a purblind law still 
mumbling ancient maxims. Is it worth our while to 
maintain the pretence of the permanent hypothesis ? 







When we reach the operative clauses of the new social 

contract, we fall, with a thud, from the spacious realm 

of the speculative upon the actuahties of life. It is 

inevitable. Nor would we avoid it if we could. For 

economics does not embrace all hfe, nor explain all 

history. We may differ as to the part played in 

history by the materialistic factor ; when the learned 

men of the world are disputing over it, who am I that 

I should decide ? My quarrel is first with those who 

ignore it altogether, and, secondly, with the monstrous 

regiment of scribblers who cannot intellectually escape 

from that ceconomia vulgaris, which, since the days of 

Bentham, has been the palladium of our commercial 

system. Nevertheless, it is our business, with vigilance 

and patience, to infuse popular political economy 

with a greater and ever greater " content." It is 

only in this direction that any compromise is possible. 

I remember that many years ago the " catastrophic 

theory " was popular in certain Sociahst circles. The 

argument was too easy to be true. The capitalistic 

system would one day finally disintegrate, the transi- 


tion to SociaUsm being the work of a few hours. The 
disintegration would, of course, have been proceeding 
(as with the one boss shay) for a long period, to culminate 
in some dramatic event— the universal strike, a great 
tumult, or what not. Therefore, the duty of all 
Socialists was to push on with their propaganda, 
looking neither to the right nor the left, inspired with 
the belief that the catastrophe might come at any 
moment, like a thief in the night. And any compromise 
with the enemy merely postponed the advent of the 
great day. We have all, I think, passed beyond that 
quaint doctrine of determinism tinctured with free- 
will. We do not now, I trust, so hopelessly confuse 
our categories. We must have regard for factors 
other than, even if subsidiary to, the fundamentals 
of economic science. Teleology and metaphysics still 
play their parts in the Hfe of mankind and we disregard 
that fact at our peril. But if the materialist historical 
school limits its explanations to its own frontiers, the 
exasperating aspect of the ceconomia vulgaris is its 
inconsequent absorption of economics, morals, religion, 
ethics, and commerce into an indigestible whole. It 
is at least important to remember that the economic 
elements are non-moral ; ethics may discover for us 
some fules of conduct in our contact with these non- 
moral elements. I can well believe that there is a 
higher unifying synthesis. I wish I knew what it is ! 

Subject, then, to a clear recognition of the vital 
truth of our economic principles, we need not unduly 
fear their partial application to life ; or even their 
partial absorption into the ceconomia vulgaris. All to 
the contrary ; this is veritably the thin end of the 
wedge. It is not compromise ; it is our pioneers 




going over the parapet. And our problem is : how far 
has the ground been prepared ? 

As we approach the new social contract, does the 
validity of our argument disclose itself ? In agricul- 
ture, for example ? As the war proceeds, the elements 
of our national life are revealed in their varying 
dimensions and urgencies. Our Army needs come 
first. But food is as important. And so we come to 
agriculture, still, by the way, our largest industry. 
Enter Mr. J. L. Green, who makes a httle proposal to 
the Times. He wants the Government to order 10,000 
parish councils to put under wheat, by the end of 
spring, at least 50 acres in each parish, or 500,000 acres 
in all. If this were done, so he avers, it would provide 
bread for 5,000,000 people for six months. Councillors, 
farmers, or others who thwarted the order are to be 
heavily fined and otherwise penalised. The method 
seems a little Prussian, but, as Mr. Green says, " There 
is now no time to stick at trifles." Assuming the 
accuracy of Mr. Green's estimates (and I see no reason 
to doubt them), and assuming the capital to be forth- 
coming (no great difiiculty as a matter of fact), we, 
nevertheless, reach the disquieting conclusion that the 
existing agricultural industry is not proving equal to 
the requirements of war conditions. Something has 
got to be done ; this is no time to stick at trifles. If 
the isolated individualism of the British farmer fails 
us, then we must have resort to some kind of collec- 
tivism. It apparently only needs the ukase of a 
Minister. Come ! What are we waiting for ? Alas ! 
It is not quite so easy as it looks. 

Some practical questions call for solution. Where 
is the labour ? And who will direct 'operations ? A 



parish council itself cultivating the soil is not without 
humour. And who shall decide upon the rate of 
wages ? And how shall the profits be allocated ? 
Granting that it is a good idea to grow this wheat- 
needs must when the German drives— I suggest to 
Mr. Green that there is a more excellent way. Instead 
of compelling 10,000 parish councils to do it, why not 
throw the onus upon a representative body of agricul- 
turists ? It is not without significance that, ten or 
fifteen years ago, Mr. Green's proposal would have been 
hailed by the whole body of SociaUsts as an overwhelm- 
ing admission that the day of laissez /aire was ended, 
and that Socialism was triumphantly vindicated. I do 
not think that Mr. Green's proposal will meet with 
more than a passing glance from the Socialist Old 
Guard. The facts have proved too strong for them. 
They know that an organisation of local government 
is strictly Hmited to its own particular function ; they 
know that that function cannot be expanded to 
include industrial production. 

Not only is the organisation inadequate ; the per- 
sonnel is misuitable. If 10,000 parish councils are to 
plant 500,000 acres to produce 16,000,000 bushels of 
wheat, it obviously becomes a very large agricultural 
transaction, its success depending upon skilled labour 
and management working upon an ascertained economic 
unit. Mr. Green proposes 10,000 separate and inde- 
pendent managers ; we Guildsmen would say that the 
work should be done by the agricultural industry 
itself, on lines laid down by the practical experience of 
the industry. We would, of course, go much further. 
We would assert that only by a democratically organised 
industry — a Guild, in short — could this work be done 



with satisfaction to all concerned. One foreman, 
democratically chosen by the labourers in each parish, 
would do the work better than a parish council, whilst 
the distribution of the wheat would, of course, be more 
economically managed from some centre, chosen for 
that specific purpose. 

Mr. Green may not unnaturally inquire why the 
parish councils should thus be cavalierly ruled out ; 
why their present limited functions should not be 
extended. I suggest that he has unconsciously supplied 
the answer. He has in mind certain individuals — 
" councillors, farmers, etc.," who might thwart the 
work. And I can well believe it. These spoil-sports 
are the product of local politics. Surely we under- 
stand by this time that politics — local, municipal, or 
national — is a poor bed-fellow for economic work. 
Pohtics and industry do not mix and ought not to 
mix. Ignoring the main fact that the parish councils 
are in tutelage to the County Councils (where politics 
— the pontics of the motocracy — rules the roast) it is 
easy to see that the selection of the land and the control 
of the work would lend themselves to petty politics, 
to an extent only to be reahsed by those who have 
lived in rural England. It is not only the inconvenience 
and irritation of the intrusion of politics, bad though 
that may be ; there is a principle underlying the 
Guildsman's criticism. For, whilst it is essential that 
our industrial work should be done on exclusively 
industrial lines, it is equally essential that pohtics 
should be purified from mercenary considerations. 
Politics ought to be the expression of the spiritual life 
of the nation, manifesting itself centrally in ParHa- 
ment and locally in the subsidiary governing bodies. 


My criticism, it will be observed, is motived by the 
principles deduced from the purely economic argument 
that labour is a commodity, and that it can only cease 
to be a commodity, economically considered, when 
Labour, by a monopoHsing process, can control its 
labour. That involves a fundamental change in our 
national activities with its logical sequel of a new 
phase in our poUtical economy. Nevertheless, my 
knowledge of agriculture, meagre as it unfortunately 
is, tells me that this purely deductive concept corre- 
sponds with the concrete facts of agricultural fife. 

So far, then, it would appear that the only new 
proposal in regard to agriculture favours a collectivist 
rather than a Guild solution. Even so, the contrast 
between the two conceptions suffices to prove that in 
practice the Guild solution must ultimately be accepted. 
I am not without some support. The labour shortage 
in agriculture has now become acute. Farm labour 
has been " combed out " to such an extent that our 
home food supplies are seriously threatened. Team- 
sters have gone ; shepherds have gone ; other essential 
farm labourers have gone. A crisis has been reached. 
The Hon. Charles Bathurst is alarmed. He now 
proposes that a board of referees should be appointed 
to decide in the case of all skilled farm workers whether 
their replacement is likely to reduce materially the 
production of food. But why stop there ? Might 
not this board, composed of practical and experienced 
agriculturists, become the nucleus of a representative 
Agricultural Congress and (full powers being given to 
it) itself boldly assume the responsibihty of organis- 
ing and marketing all agricultural produce ? If the 
pressure of the war brought such a Congress into life, 

'If ■ 


we may be sure that it would not die when peace 
comes. Indeed, it will be doubly important. The 
farm labourers who have gone to the war, fed, clothed, 
and paid on a higher standard than they have ever 
before experienced, will not willingly submit to the old 
debasing conditions when they return. 

Whilst it would be foolish to believe that any 
approach to Guild organisation is as yet even vaguely 
apprehended by the agricultural industry, it is almost 
equally true to assert that the longer heads in our 
other staple trades are trying to fend off and forestall 
the creation of Guilds. Let us return to the Garton 
Researchers. They have already discovered that 
Labour objects to (and sometimes rejects) the com- 
modity theory ; they have also discovered that a 
change of status is imperative if industrial peace is to 
be attained after the war. Naturally enough, being 
what they are, they dare not discard the permanent 
hypothesis. Labour must remain on a commodity 
basis because rent must be exacted and dividends paid. 
They accordingly seek to evade that issue, at the same 
time, if possible, conferring on Labour a new status. 
As the only new status that Labour can accept is the 
change involved in the rejection of the commodity 
basis, we may be certain that our Researchers are 
solving no problem, and, at best, are merely postponing 
the evil day. 

It is extremely interesting, however, to note their 
proposals. Their thesis, shortly stated, is that our 
one way of salvation, after the war, is to concentrate 
on production. Quantitative production, quaHtative 
production, any kind of production. In their view, 
all production spells wealth. But it is recognised 

I ' 




that the war has only temporarily obscured the 
pre-war class struggle ; it still exists, and unless 
diplomatically handled will break out with redoubled 
fury when Tommy comes marching home. They 
would, therefore, kill two birds with one stone : by 
conceding workshop control and by Joint Boards, they 
seek to conciliate Labour ; by conciliating Labour, 
they confidently reckon upon the smooth working of 
the factories, and so securing that increased produc- 
tion which will restore our economic power. It is so 
simple, one wonders why nobody ever thought of it 
before. How, then, is Labour to be conciliated? In 
the more isolated businesses, a joint committee is 
proposed representing both the Management and the 
Works Staff. 

" The representatives of management would be 
required to explain the nature and extent of any pro- 
posed innovation designed to increase output or 
economise effort — the introduction of new automatic 
machinery, time and motion study, standardisation of 
tools, analysis of fatigue, elimination of waste — and 
its effect upon the earnings of the firm and of the 
individual worker. This explanation should be as 
clear and full as possible, with the object of giving 
each worker an interest "and sense of responsibility 
in his work, by making clear to him, through his 
representatives, the reason for the methods to be 
adopted and the relation of his job to the whole 
process of production." 

Most friendly to be sure. And now suppose that 
the workers, having considered their representative's 
report, take strong objection to the proposed innova- 



tion, which really means reduced costs and increased 
profits, what then ? Our Researchers of mild and 
benevolent aspect have their answer pat : "A wise 
Employer will always have the interests of his staff at 
heart, and workmen who feel themselves to have a 
recognised interest in the business will have many 
suggestions to put forward for promoting its efficiency." 
So I should think ! And the permanent hypothesis ? 
Go away ! Is this a time for joking ? Thus we see 
that a new spirit pervades the industrial world. Peace 
reigns. Production proceeds apace. Consider the 
new idyllic conditions in the person of John Smith. 
John has spent an hour at the Joint Committee. They 
have, in great amity, discussed a " proposed innova- 
tion." John has been duly impressed with a " sense 
of responsibility in his work by making clear to him 
the reason for the methods to be adopted." He goes 
home to tea, smiling and happy. The kettle, boiling 
on the hob, sings a soothing welcome, and, unless his 
nostrils deceive him, there are crumpets in the oven. 
His wife welcomes him, the love-light in her eye. 
Surely it were good for the soul to remember that it is 
on such happy homes we have built up, in transcending 
grandeur, our mighty Empire. 

** Come, Mary, lass, bring on the grub." 
" It's all ready. Jack, dear lad. Had a good day at 
the works ? " 

" Ay ! Spent the last hour at the Joint Com- 

Anything happen ? " 

Ay. A * new innovation,' as they call it." 

What's that ? " 

A new machine. Saves labour. It's a grand 





I i 



thing to be told everything. Makes you see what's 
in the bosses' minds." 

" Whose labour does it save, Jack ? " 

" Well, in this case, mine." 

" And what will they do with you ? " 

" Oh, I've got the sack." 

" And what's to become of us ? " 

" God knows. You see, Mary, it's written at the 
head of the Joint Committee's minute-book that ' a 
wise Employer will always have the interests of his 
staff at heart, and workmen will have many suggestions 
to put forward for promoting its efficiency.' " 

" And who proposed this new innovation ? " 

"I did!" 

Leaving John Smith, happy in the fully acquired 
knowledge " of the reason for the methods to be adopted 
and the relation of his job to the whole process of 
production," let us move on to the larger scheme of 
organisation for the staple trades. 





Outlines (continued) 

The Carton Researchers are deemed to be representa- 
tive of the more enhghtened profiteers, and that is 
why I treat them with so much respect. But if these 
enhghtened capitahsts have no plan to avoid the 
miseries of the class struggle, then we may be sure 
that, within the sphere of the permanent hypothesis, 
there is no solution. Soft words butter no parsnips, 
and a mere declaration in favour of joint conferences 
to explain the reason of innovations must prove futile 
unless accompanied by a binding agreement to regard 
the unemployed as part of the working staff. We 
know, however, that costs are estimated by accounting 
only for the cost of the labour commodity actually 
operative "at the moment of the production. That is 
to say that the cost of the reserve of employment is 
thrown upon the community and not upon the industry. 
It is as though the reserve forces in France were not 
on pay and dependent upon charity. It is characteristic 
of the prevailing shallow thought upon nationaleconomy 
that because, during the war, unemployment has gone 
down to less than one per cent., after the war labour 




will be in equal demand. Thus, the Carton Memor- 
andum explicitly declares that " the probable cause of 
unemployment after the war will be, not the lack of a 
demand for labour, but the difficulty of bringing to- 
gether the workmen and the job." Then follow the 
usual proposals for joint committees working in con- 
junction with the Board of Trade — the Webb-Be veridge 
nostrums known to all of us. It is true that the 
Carton writers, on second thoughts, hedge a little. 
After all, they admit, " it is difficult to see how a 
certain amount of temporary unemployment can be 
avoided " — and fall back upon " State and municipal 
expenditure upon works of public utility." 

Thus we see that the war has taught these gentlemen 
precisely nothing. At bottom, they are bankrupt of 
ideas. All that they do is to set out in new clothing pre- 
war proposals. Now, I assert with confidence that after 
the war we cannot escape from a dreadful and probably 
a prolonged period of acute unemployment. We are, 
at present, living either upon our capital or are trans- 
ferring our capital to non-industrial purposes, such as 
munitions or public loans. A simple example occurred 
to me only last week. I wanted to sell a house. 
Everywhere it was the same story : habitual buyers 
of that class of property were steadily investing in 
six per cents. It was less trouble and less risk. It 
may be said that, after the war, investors will realise 
on their Government loans and readapt themselves 
to business requirements. But how will they realise ? 
Their money has been spent ; what remains is the 
credit of the Covernment Consolidated Fund. The 
credit is doubtless excellent ; but credit is one thing 
and ready cash another. Even if it be granted that 

! I 




our existing resources are equal to our paper credit, 
the loss through destruction and dislocation will im- 
peratively call for the mobilisation of new capital 
resources. Where are they to be found ? In one 
direction only : in the capitalisation of co-ordinated and 
co-operative labour. (That, economically, is why the 
Guilds are inevitable.) But will any sane man declare 
that such a new departure in finance is possible either 
during the war or immediately upon its termination ? 

Let us face the facts : the process of readaptation to 
peace conditions will be slow and painful, and cannot 
but express itself in a high percentage of unemploy- 
ment. The glamour of our present artificial industrial 
conditions seems so to hypnotise nearly every writer 
on Reconstruction that he remains blind to the certain 
fact that, after the war, unemployment will be our 
most pressing problem. It will be a nightmare. 

I have interjected this question of unemployment 
(almost literally the skeleton at the feast) at this point, 
because, if we forget it, we cannot appreciate at their 
true value the various proposals for Reconstruction 
now emanating from well-fed quarters. Of two things, 
one : either there must be a new departure by com- 
pelling every industry to maintain its own unemployed, 
or (the more exact definition) its own labour reserves ; 
or, we must fall back upon the old conditions, the Trade 
Unions succouring their own members and the com- 
munity, with the same old cruel kindness, attending 
to the residue. If we are strong enough to force the 
new departure, we have begun the industrial revolu- 
tion, whose one ending is the Guilds. We can very 
easily test the intentions of the Reconstruction writers 
by bluntly putting the question : Are you prepared iq 



charge the industry with the maintenance of its own 
unemployed ? I do not anticipate a particularly fruit- 
ful reply. In the second alternative, we have the Trade 
Unions with their regulations abrogated and their funds 
depleted. And just as the Trade Unions are weakened, 
so relatively are the Employers strengthened. 

I find it difficult to write about unemployment in 
measured language. How can we forget that it is the 
tragedy that has dogged and damned every social and 
economic movement during the past century ? The 
1834 Poor Law Report is surely the most horrible 
document ever penned by man or god or devil, whilst 
the Poor Law Amendment Act that followed it marks 
the lowest degradation to which we have simk as a 
nation. Then came the " hungry 'forties " at a time 
when we were indisputably the richest people in the 
world. With the interlude of the Industrial Remunera- 
tion Conference, whose report is now suitably covered 
with dust, we come to the 1892-95 industrial depression, 
when the unemployed at length made themselves 
heard. The Unemployed Committee, 1893, had no 
solution to offer beyond a circular issued by the Presi- 
dent of the Local Government Board. Then came the 
Minority Report of the Poor Law Commission, with 
its diabolical distinction between poverty and destitu- 
tion—a refinement of cruelty that would have made 
Torquemada green with envy. I remember about 
1895 speaking of employment to a prominent economist. 
" There is no unemployed problem," he remarked ; 
'* it is a condition, and not a problem. There are 
industrial problems, fiscal problems, political problems, 
but, having regard for human nature and the facts of 
life, there is no unemployed problem, properly so 




called." And this is still the scientific attitude. " If 
we do this or that, then there will be a marked reduc- 
tion of unemployment," is really what men and social 
reformers think. The result is a certain fataHstic 
acceptance of unemployment — sorry, you know, but 
it can't be helped. And so, in times of depression, it 
spreads like a blight over the industrial areas, being 
regarded very much as an Act of God. 

Nevertheless, all scientific dicta to the contrar^^ not- 
withstanding, unemployment is a problem in itself.^ 
It can be quite simply stated. The employer claims that 
he need only buy so much of the labour commodity as 
he requires for any specific purpose or given product. 
He asserts that he cannot compete in the market unless 
the sale of the labour commodity strictly conforms to 
the law of demand and supply. But he admits that a 
reserve of labour is requisite to regulate wages and to 
meet sudden or increasing demands. " Why, then, 
don't you maintain your own reserve ? " we ask. 
" You do it with ore, or timber, or cotton, or wool ; 
why not with labour ? " " Oh ! " he answers, " in 
the one case it is economic necessity, in the other 
it isn't, and the essence of business is to yield only to 
the imperative. Of course," he adds, " as a citizen 
and a ratepayer, I am willing to bear my share in the 
maintenance of the man as distinct from his labour. 
But I'll only buy his labour as and when I want it. 

1 It should be noted that there are now two problems of unem- 
ployment : (fl) abnormal unemployment, dealt with by Mr. Orage 
in the Preface ; (b) the normal problem inherent in the main- 
tenance of wagery. See also Mr. G. D. H. Cole's " Some Reflections 
on the Wage-System " — a series of articles in New Age (March-April 
1917) and soon to appear in book form ^s Self -Government in Industry 
(G. Bell & Sons). 6s. 



Besides, if I secure a large reserve of raw material, 
that is a capital outlay ; labour, as you know, goes 
into the revenue and expenditure account." That is 
where the permanent hypothesis carries us! It is 
not the man that is wanted ; it is his labour. The 
Guildsman's answer is so simple that it confounds the 
wise: "Seek first the man, and his labour will be 
added unto you. And the man is entitled to main- 
tenance in season and out of season by the trade 
which has accepted him and for which he has 


Every Reconstruction proposal, therefore, that 
ignores or minimises the probabihties of unemploy- 
ment is in the nature of a dishonest gamble. It is 
in fact intellectually negligible, if it does not provide, 
not only for uneniployment due to dislocation, but 
unemployment due to shortage of demand. The first 
is comparatively simple and temporary, easily solved 
by carefully arranged demobilisation ; the second will 
remain after the war, as it was before, the test of our 
statesmanship and of our sincerity. The Garton 
Researchers have met the question with vague generali- 
ties. It is nevertheless interesting to consider their 
constructive proposals as a sign of the times. A period 
of unemployment will shake their structure to pieces ; 
but that need not deter us from examining the structure, 
not so much because of its inherent value, but to get 
at the minds of its variegated architects. We have 
aheady discussed their proposal for a joint conference 
in works of an isolated character, and discovered that 
innovations, being to save expenses and reduce labour, 
lead to unemployment, and we left John Smith ponder- 
ing whether a reasoned discharge was in substance 



preferable to the old system. Either way, the door of 
the factory was closed against him. 

We have next to consider the staple trades in their 
more concentrated form. The Gar ton proposal is that 
we shall set up Joint Boards composed of representa- 
tives of the Employers' Associations and the Trade 
Unions. This sounds promising. Capital and Labour 
have surely met and buried the hatchet. Let us go into 
more detail. " Having regard to the differentiation of 
functions betw^een Management and Labour, and the 
large number of problems affecting one or both parties, 
two co-equal Boards might be created in each industry, 
one representing Management and the other Labour, 
with a Supreme Board of Control co-ordinating the 
work of both." It looks as though we were progressing 
towards the Guilds. The Management Board would 
attend to the business side and, of course, the Labour 
Board would deal with conditions and hours of labour, 
demarcation, dilution (observe, please, that dilution is 
to continue after the war). I really must quote the 
delightful conclusion : 

*' In this manner it should be possible to construct 
and give effect to a definite policy and programme for 
each great industry as a whole, representing a recon- 
ciliation between the common and competing interests 
of Employers and Employed, and based both upon the 
desire to obtain the maximum of efficiency and the 
desire to obtain the best possible conditions for the 

Hang it all ! Wages were surely intended to be 
included in the settlement, for it represents a " recon- 
ciliation." Yet it is curious that wages are not 





specifically mentioned. A Httle doubt oppresses me. 
It is rather odd, don't you think ? 

Having made provision for District and Works Com- 
mittees, we mount to higher things— something very 
like a National Guild. The Supreme Board of Control 
is finally to resolve itself into a National Industrial 
Council for each of the staple industries or groups of 
allied industries. Election by ballot, parallel units, one 
Managerial and one Labour representative. Nothing 
(except wages) is overlooked. " A speaker of broad 
sympathies and experience, capable of directing and 
focusing, the discussions upon the practical problems 
to be dealt with, would be chosen by mutual consent." 
I almost think the Garton Researchers must have 
read chap, v., part ii., of National Guilds. 

That doubt about wages still haunts me. Surely. 
. . . W^ll, let's read on : 

" Such Industrial Councils would in no sense super- 
sede the existing Employers' Associations and Trade 
Unions, many sides of whose present acti\dties w^ould 
be unaffected by the creation of the new bodies. 
Matters connected with the sources and supply of raw 
material and the cultivation of markets for the disposal 
of the finished products would remain exclusively the 
concern of purely commercial federations of manu- 
facturers, acting in conjunction with the State. The 
benefit side of Trade Unions, and many phases of the 
internal organisation of labour by them, would be 
similarly unaffected." 

It grows curiouser and curiouser. Even the Em- 
ployers' Associations are not to bother themselves 
about wages — only raw nifiterials and markets — and 




" acting in conjunction with the State." In such 
altitudes, to mention wages would seem vulgar and 
out of place. No employer would dream of it. Of 
course, over a cigar after lunch it might be cursorily 
mentioned a propos de rien. And the Trade Unions 
too. They would be too deeply concerned with 
" benefits " and " internal organisation " for wages 
ever to flit across their minds. Nevertheless, " such 
Industrial Councils would in no sense supersede the 
existing Employers' Associations and Trade Unions." 
Can the Researchers be pulling our legs ? 

No ! I find that, after all, wages have not been 
overlooked. We are told that the field of action open 
to the Industrial Councils would be very great. Then 
it is alphabetically tabulated :—(a)—{b)—{c)—(d)—{e) 
— (/) the prevention of unemployment, the development 
of security of tenure in the trade, and the decasualisa- 
tion of labour ; (g) questions of wages and piece-rates. 
After all, we do come to it, don't we ? 

The embarrassing question unin\ited emerges : Are 
the Garton Researchers a band of ingenuous young 
men, or do they take us for fools ? Do they seriously 
suggest that the Employers' Associations will not discuss 
wages ? Will not, in fact, decide what wages they will 
pay, precisely as they did before the war ? If the 
Researchers really think so, I promise them that they 
will be quickly disillusioned. The Employers will 
settle the question of raw material and the cultivation 
of markets easily in a quarter of an hour ; they will 
spend hours discussing wages. But why should raw 
material and markets be reserved exclusively for the 
Employers ? Surely the Management Boards can 
attend to such matters, probably better than the 




Employers themselves. And have the Trade Unions 
and the workers nothing to say about the supply of 
raw material and the cultivation of markets ? Their 
wages depend upon it. Clearly not a thing. And 
why.? Because Labour itself is a raw material, and 
how can one raw material look after another ? The 
permanent hypothesis still prevails. 

It is a pity that Lord Wrenbury did not pose his 
searching question as to " the share and interest in the 
thing produced " before the Garton Memorandum was 
written. I can readily understand that the same 
question asked by Guildsmen would be ignored by 
such a solemn and respectable group ; but the same 
question put by a Lord Justice of Appeals is quite 
another pair of shoes. The answer, however, would 
substantially be the same. Lotd Wrenbury suggests 
partnership ; the Garton Researchers stand by " wages 
and piece-rates," raw material and markets being the 
exclusive concern of the Employers. The permanent 
hypothesis is sacred. 

After all, they have mentioned wages and they have 
mentioned imemployment. Casually, no doubt ; but 
really and truly they have not been overlooked. When 
I come to examine this Memorandum, I am bound to 
admit that there is practically nothing relevant that is 
omitted. But the same emphasis and stress is given 
to everything. No one thing is more important and 
more urgent than another. You pay your money 
and you take your choice. With one exception : the 
one thing really urgent is production — and the Em- 
ployers will look after the raw material (including 
labour) and the marketing of the finished products. 




The Collectivist Alternative 

It was not unnatural that the spectacle of the State 
intervening in trade and industry, controlling the rail- 
ways, the munition factories, and now the South 
Wales mines, purchasing wheat and sugar in gigantic 
quantities, and generally nosing into everything, 
should lead many to think that, after all, State 
Socialism must be the way out. We must admit that 
we have learnt much by these gigantic State experi- 
ments — particularly what to avoid. If we go about 
with our eyes open, we cannot but be struck with 
the errors committed and the wastage incurred. Of 
course, it may be ascribed to the rush and bustle of 
war. But the question ever recurs whether, had our 
industries been organised on a Guild basis, far greater 
efficiency and less waste would have resulted. When 
the war is over, the story of the Mauretania will 
become a classic. And I am waiting with considerable 
curiosity to hear the inner history of the appointment 
of the Food Controller. 

I am not now concerned with the situation as it is 
in war-time, but if State intervention during war is to 




be held up to our admiration, it is not irrelevant to 
criticise it, even as a war measure. One conclusion 
seems to have been reached : that, however incom- 
petent our Bureaucracy may be in administration, it 
has , proved its capacity as a merchant. With un- 
limited State credit behind it, it has bought raw 
material to great advantage, and therefore — so runs 
the argument — when Peace comes, let the State con- 
tinue to buy for all industries ; to act as broker, in 
short. This is the State Socialist's unconscious reply 
to the Garton Memorandum, which specifically reserves 
the purchasing of raw material and the marketing of 
the finished products exclusively to the employers. 

The general discussion, then, on Reconstruction 
brings us to some agreement. It is agreed that Labour 
must have a voice in workshop management. It is 
agreed that this share in control must be vested in the 
Trade Unions. Even trade policy is to be, in some 
degree, the subject of discussion, in w^hich Labour 
shall be heard, in the Joint Committees or the 
Industrial Councils. Nor is that all : " This inter- 
relation of functions," says the Memorandum, " con- 
stitutes a real partnership between the persons con- 
cerned in any business, whether as investors, managers, 
or workmen, or in any two or all of these capacities." 
It is unhappily evident that when the Memorandum 
says " real partnership " it does not actually mean it ; 
but at least the idea of a partnership of some sort 
is mooted as feasible. Assuming the concession of 
partnership, it comes to this : that such partnership 
shall be excluded from its share in the raw material — 
by the Employer, according to the gospel of Garton ; 
by the State, according to the State Socialist. If, 

i = 




then, workshop control is the compromise between 
Capital and Labour, we have yet to decide whether we 
have a preference for the private or the State control 
of raw material. Is it a question of policy or of 
principle ? 

As things are, of policy only, I think. Rut the 
State Socialist may force the basic principle. He 
may, and probably will, contend that the State, in its 
own interest, must buy not only for industries as they 
are, but for the Guilds when they are formed. Now 
the National Guildsman will without any reservation 
declare that the Guilds must buy for themselves. On 
that issue, he is prepared to light as a matter of prin- 
ciple. But short of a Guild, with industry only quasi- 
democratised, it is quite open to him to declare for 
the continuation of the private purchase of ra\V 
material in preference to State brokerage. In such 
circumstances, it is purely a question of policy. 

It is a difficult dilemma. The whole theory and 
spirit of National Guilds runs counter to State inter- 
vention in industry ; but equally it denounces private 
control. When this subject was recently discussed at 
a Guild meeting, a prominent Guildsman roundly 
declared that the State is the enemy. His case is 
that the Bureaucratic appetite grows by what it feeds 
upon ; that every accretion of economic strength 
makes the State, as such, less disposed to hand over 
its functions when the Guilds demand it ; that when 
the crisis comes, it will be easier to deal with tlie private 
capitalist than with the Bureaucracy. But is it a 
sound contention ? Does it not, in fact, exaggerate 
the power of the State and underestimate the power 
of the Employer ? Which enemy has the more 



powerful defences ? And have we considered a 
possible combination against us of both our enemies ? 

It will be granted, I think, that the Bureaucracy 
and private Capital have more in common than 
Labour has with either. Superficially, it would seem 
as though in politics Capital and Labour have fought 
against the State and the Junkers. But they did 
not fight as friends. Throughout that struggle. 
Labour was the cat's paw and not the friend of the 
manufacturers. That battle has been won and lost. 
Labour was the loser ; the manufacturers won and 
promptly intermarried and generally coalesced with 
both the Bureaucracy and the landed interests. For 
my part, I think it enormously important that Labour 
shall never again play the part of cat's paw for the 
Employers. It is certainly prudent to assume that 
there will be close and subtle co-operation between 
Bureaucracy and Capital, until the Guilds are strong 
enough to dictate their own terms. When that time 
comes, if we have to snatch the control of raw material 
from Capital, it can rely upon the covert support of 
Bureaucracy ; if we have to take it from the State, 
the covert support of Capital will not be so powerful, 
because it will already have been weakened in its 
economic power, to the extent of its loss of rent, 
royalty, and profits on raw material. I think, there- 
fore, without being dogmatic on the point, that the 
Bureaucracy is the easier prey of the two. f] 

This business of raw material is vastly important. 
It plays to-day the part in industry formerly played 
by land. Rent is, at bottom, the economic powder 
exercised by one possessor over another — the other 
generally being the labourer. With the control of raw 


material, a possessor can frustrate any industrial 
policy or hold up an industry or a single undertaking 
indefinitely. When the Garton Researchers reserve 
raw material to the Emplo^^ers, they know very well 
what they are doing. Suppose the Joint Committee 
or the Industrial Coimcil adopt a line repugnant to the 
Employers, the Employers can speedily exact sub- 
mission by withholding raw material. If the Em- 
ployers can do it, the State can do it. But the Em- 
:X^c.JX^ ployers can do it quickly and vindictively; that is 
-**''"^^*'*^ hardly possible to the State. There is another aspect 
t*^"*"^ r^ of the question. The available raw material in Great 
^*^*^^ Britain — coal, mainly — is already " bespoke " • ^^^^ 



State can hardly interfere without a complete sub- 
version of the prevailing conception of property. 
The bulk of our raw material — cotton, wool, timber, 
wheat, 'hides, silk, rice, meat — comes from abroad. 
It is therefore closely related to transport, not to 
mention banking. How long would the State, the 
purchaser of raw material, submit to private ship- 
owners and private bankers ? One step leads to 
another ; where would intervention stop ? Now 
it is an important, though not a vital, part of the 
case for National Guilds that the organised industries 
can carry on their work much more efficiently than 
can the State. I suggest that the community would 
demand efficiency, and that if Guild organisation pro- 
ceeded apace, the Guilds would, in the fullness of 
time, inherit all that organisation which the State had 
previously seized from the Employers. 

Yet another consideration must weigh heavily in 
the State balance. With the control of raw material 
taken from the Employers and their industries demo- 




cratised to the extent of works control, is it not certain 
that we are hmiting the Employers' power to maintain 
wagery ? Have we not taken a step towards the 
destruction of the permanent hypothesis ? And 
again, if we succeed in finally saddling each industry 
with the maintenance of its own unemployed, dealing 
a shrewd, if not a vital, blow at the competitive wage- 
rate, we have travelled much more rapidly towards the 
Guilds than if we had left the control of raw material 
to the employers. The policy, then, for Guildsmen to 
pursue is to concentrate now on works control, and 
be ready to press for industrial as distinct from State 
maintenance the moment unemployment threatens to 
become acute. 

"^e are now confronted with a family quarrel, for 
Guildsmen are not agreed as to the logical outcome 
of workshop control. One group contends that it 
must stop there ; the other that it leads to representa- 
tion on the Directorate. The first argues that Labour 
must not, in any circumstances, concern itself with 
profits, must not touch the accursed thing, which 
it would do if its representatives became Directors. 
It is morally repugnant to them. The second group 
remains unconvinced. In the first place, so it con- 
tends, you may put your men on a Directorate without 
tauching, or being responsible for, profits ; that 
directors have other functions, notably the power to 
control management, and therefore Labour's power in 
industry is pro tanto strengthened. But both groups 
are agreed that all and any representation must come 
from the Trade Unions ; they are not minded to 
tolerate a second edition of the South Metropolitan 
Gas Company — always a menace difficult to exorcise. 




In forming an opinion on this point, which is partly 
ethical, it is well to bear in mind our immediate object, 
which is to secure economic power for the workers. 
Unless this economic power be obtained, we shall 
never effect the transition ; we shall be compelled to 
live in abstractions. Now every increase in Labour's 
economic power means a relative decrease in Capital's 
economic power. Further, it is not essentially immoral 
for Labour to concern itself with the distribution of 
surplus value. In fact, the more surplus value returns 
to Labour the less remains for the exploiter. But 
inasmuch as there are vital moral elements in the 
crusade for the establishment of Guilds, notably the 
passion for freedom (now only possible through the 
economic medium) and the natural piety that sees 
in labour a sacred thing and not a mere commodity, 
it is of first importance that no section of Labour 
shall ever find itself so circumstanced that it is to its 
advantage to maintain wagery, because it has obtained 
a remunerative share in the control of its own par- 
ticular industry. I am not prepared to deny the 
possibility of such a development ; but is it not rather 
remote ? 

In National Guilds (p. 240) there is an imaginary 
conversation between a deputation from an incipient 
Guild and the Directorate of a public company. The 
deputation bluntly demands half the profits and asks 
that the cheque be made payable to the Guild. The 
General Manager then suggests a profit-sharing scheme 
with the company's own employees. The deputation 
rejects any private arrangement of that character. It 
also rejects any increase in prices " because that would 
only victimise our fellow- workers." For the life of 



me, I can see no objection in principle to this drastic 
procedure. It is assumed in this case that the profits 
are £100,000, and the incipient Guild demands 
£50,000, which sum goes to the fighting fund. Is 
organised Labour either morally or economically 
weaker for the transaction ? In my opinion, stronger 
in both senses. No doubt it is rather a crude way of 
doing it ; no doubt a gradual integration of organised 
power would enable the workers to absorb the £50,000 
by raising their consumptive capacity beyond the 
commodity wage-rate. Of the two processes, I prefer 
the second. But if the first opportunity presents 
itself, are we to reject it ? It seems to me it must only 
be rejected, if the transfer of the profits places the 
particular group of workers concerned in a privileged 
position. As the money is specifically allocated to the 
Union, I cannot see how any particular group becomes 
wedded to profit-mongering. Alas! Precious few 
opportunities for so easily annexing £50,000 will 
present themselves ! 

There is another reason in favour of representation 
upon directorates. The Guilds— at least as outlined 
in the book — postulate a hierarchy. There is no 
reason why this hierarchy (even when democratically 
elected) should be composed of middle-class administra- 
tors. If the competent workers are to man the hier- 
archy, they must be trained in administrative work. 
Certainly a part of that training must be directorial 
in character. 

The industrial problem, even from the Guild point of 
view, is not so simple that we shall not be constantly 
confronted with difficulties and dilemmas. In the two 
dilemmas here discussed, I provisionally favour : (a) 



a preference for State over private control of raw 
material ; and (b) for representation on the Directorate 
as the logical corollary to workshop control. But are 
the two points not related ? Suppose that Labour had 
considerable, if not adequate, representation on the 
Directorate, would it not modify my preference for 
State control of raw material ? There is this to be 
noted : That in so far as such representation gives 
effective power to Labour, such power would be exer- 
cised to that extent over raw material, presuming it 
to be still controlled by the Employers. As the object 
we all have in view is to realise Guild organisation in 
the shortest possible time, such joint control over raw 
material might obviate any future struggle with the 
Bureaucracy, with its possible prolongation of the 
struggle. I am not dogmatic on either of the dilemmas 
cited ; they both demand detailed analysis. 

When State Socialists talk of the advantages of 
State credit in the purchase of raw material, I think 
they fail to realise that financially the Guilds could 
swallow the State budget for breakfast and be hungry 
at lunch-time. The actual turnover of the Textile 
Guild alone would swamp the State expenditure. It 
is important that our Collectivist critics should learn 
that the Guilds are not little co-operative societies, but 
the summation of the industrial activities of the nation. 
It therefore follows that the State credit, upon which 
such store is set, is precisely the measure of the Guilds' 
credit. Nor need we fear any economic comparison 
between State and Guild administration. In quality, 
in efficiency, in productive capacity, in the spirit ruling 
over these things, the future is to the Guilds and not 
to the State. 



Finally, let us not forget that Guildsmen are not 
Syndicalists ; that they believe in the State as a great 
spiritual and intellectual force. " For the first time in 
the history of mankind he will clearly understand that 
nations, like men, do not live by bread alone. The 
intermixture of spiritual with economic considerations 
which now paralyses every State action will be, in 
form certainly and largely in substance, ended. By 
transferring the conduct of material affairs to the 
Guild . . . statesmanship is left free to grapple with 
its own problems, undisturbed and undeterred by 
class considerations and unworthy economic pressure." 


^OA^^A-L^^A/^ , 


It ''1 


In War 

It is a fact (which Guildsmen may advantageously 
emphasise for the next ten years) that, for over two 
years, the wage-system has been in abeyance in regard 
to over five miUion men. These men have been on 
*'pay," and the world resounds with stories of their 
valour and endurance. Many of them have made 
sacrifices of a monetary kind, but many of them have 
been better fed and better clothed than ever before. 
Their standard of living has been raised both morally 
and materially. If victory perches on their banner, 
they will come back with heads up ; indeed, they have 
already done enough for honour, whatever may be the 
issue of the war. We may well wonder if they will 
contentedly lapse back into wagery. If they do, it 
will be under subtle duress, and they will have learnt 
how to make effective protest. If we, who understand 
wagery, from its basis to its most diverse usages, 
play our part, it is certain that it need not long sur- 
vive the war. It is curious that the most convinced 
supporters of the wage-system, Mr. Sidney Webb, for 

example, have not once raised their voices or flourished 


"\ , I 



their pens in a passionate and indignant demand to 
put^our soldiers on wage-rates, piece-work for prefer- 
ence. It is amazing that they should so meekly 
acquiesce in the negation of the very basis of their pet 
industrial system, which they nurse and strengthen 
and reform with affectionate solicitude. 

Yet these soldiers are doing the nation's work. Some 
of them are working in our arsenals, side by side with 
wage-earners, who pocket ten shillings for their one. 
Some are doing transport work, ordinarily done by wage- 
earners, others are mending boots, or shoeing horses, 
or cooking food. Some are doing responsible office- 
work — and every man on "pay." I beg Mr. Sidney 
Webb to peruse a series of articles he wrote a few years 
ago in the Herald, wherein he set out to prove that 
wagery, like the poor, we must have always with us. 
Why does he, this master of intrigue, this past-master 
in the art of hiding the pea (and generally losing it), 
permit a stupid and perverse Government to persist 
in a system of pay which he has asserted to be purely 
visionary and utterly impracticable ? A resolution by 
the Fabian Society, sympathising with the soldiers in 
their temporary exclusion from the solid comforts, 
and happy contentment of wagery, might perhaps 
bring the Government to its senses. 

This state of suspended animation to w^hich wagery 
has been consigned need not surprise us. As the 
war proceeds, the closer do we come to the elements of 
social existence. It is our contention that wagery is 
repugnant to our nature — a permanent fact in contra- 
distinction to the permanent hypothesis. War strips 
life of its accretions, of which wagery is the deadliest, 
because it disunites society when unity is imperative. 



But war discloses the essentials, the greatest of which 
is human labour — labour at home, labour at the front, 
labour with head and hand and heart. Above all, 
labour inspired with sentiments of patriotism and 
fellowship ; labour that dominates the processes of life 
and reduces the permanent hypothesis to an absurdity ; 
labour that does not vaunt itself and is not puffed up, 
quietly and with remarkable efficiency, doing the day's 
work while human peacocks strut on the stage, split- 
ting our ears with their shrill cackle. The answer to 
Germany, says the Prime Minister, is national labour, 
the non-combatant nation at work. That the supreme 
value of labour is fast being recognised, may be in- 
ferred by the increased number of Laboiu" representa- 
tives who have joined the Government. I quote, 
ipsissima verba, from the Prime Minister : 

" The third characteristic is a franker and fuller 
recognition of the partnership (observe the word 
'partnership' — it's creeping in!) of Labour in the 
Government of this country. No Government that 
has ever been formed to rule here has had such a 
number of men who all their lives have been 
associated with Labour and with the Labour organisa- 
tion of this country. We reaHse that it is impossible 
to conduct a war without getting the complete and 
unqualified support of Labour, and we were anxious 
to obtain their assistance and their counsel for the 
purpose of the conduct of the war." 

Economic power precedes and dominates political 
action. There is no other explanation ; action was 
not taken because of Mr. Henderson's beautiful eyes 
or Mr. Hodge's dulcet accents. " My experience in 


the Ministry of Munitions has taught me that there 
should be a Department which was not altogether in the 
position of employer to employed." Labour organisa- 
tion, weakened though it had been by loss of its active 
members and by dilution, had nevertheless become 
by force of circumstances blackleg-proof— there was 
more work than workers— and, in consequence, its 
economic power automatically asserted itself. Labour 
in war is strong ; why should it be weak in peace ? 
" Without Labour," said Lord Curzon, " this war 
could not be won. Without the organisation of Laboiu: 
it could not be effectively pursued. Labour, therefore, 
is entitled to a powerful voice in its direction." The 
conquest of the German is impossible without Labour ; 
is the conquest of Nature less difficult ? 

The enforced spontaneity of these official admissions 
of Labour's economic power (with its natural poHtical 
sequel), welcome though they be, are hea\dly dis- 
counted by the bureaucratic distrust of Labour's cap- 
acity to walk without leading strings and the bureau- 
cratic insistence upon the presumed necessity to 
subject Labour to external discipline. " You are 
necessary to the Government ; but you can't govern 
yourself," says Officialdom, " so kindly send along 
some safe and amenable men of your own choice to 
help us to govern you." Thus, whilst the war has 
brought some enlightenment to Bureaucracy as to the 
power of Labour, it has brought none as to the essential 
ineffectiveness of the Bureaucracy itself. It is not the 
Bureaucrats who have made guns and shells and 
" tanks," and all the endlessly varied paraphernaHa 
of war. On the contrary, they have stood in the way 
and obstructed the work with their foolish regulations 



and disciplinary methods that have defeated their 
purpose. The same remark, too, appHes to their 
relations with the employers, management, and salariat. 
Always everything has had to pass through the fussy 
Angers of semi-ignorant officials. It is the simple 
truth that practical men, of every grade, in every 
industry concerned, ha\T been in despair with the 
ineffectual striplings and pompous elderlies sitting 
in the various Ministries. 

The next lesson, therefore, to be learnt is that a 
sense of responsibility is inherent in economic power, 
and that, if we are to obtain what we want, the Govern- 
ment must frankly admit that it cannot produce its 
own requirements and must, therefore, throw the 
responsibility upon each separate industr^^ organised 
if necessary ad hoc. What it does now is itself to 
accept the responsibility, trusting to hectoring and 
cajolery to secure deliveries from more capable men 
whose efficiency is curtailed by depriving them of 

In short, the true line of development, in war 
and in peace, is industrial autonomy. Let us forget, 
for the moment, both National Guilds and wagery 
and look only to the industrial situation as it 
exists to-day. With the exception of agriculture, 
every industry concerned with production — coal- 
mining, ship-building, engineering, textiles, boots, 
saddlery and harness, food-stuffs, clothing — is reason- 
ably well organised, not only into Employers' Associa- 
tions and Trade Unions, but in every process from 
the raw material to the finished product. Plenty of 
room for improvement, no doubt : but no Bureau- 
cracy living could effect any improvement, which 



must come from practical experience. The Manage- 
ment knows precisely the demand for its output, 
whether civil or military ; it knows how best to dis- 
tribute the work, and how best to get it done. By 
calling in the Trade Unions, terms can be arranged, 
hours of work and payment and conditions generally 


I have criticised the Garton Memorandum from 
the Guild standpoint, but I see no reason why we 
might not adopt its scheme of Joint Committees 
and Industrial Councils. To these Councils, I would 
add some Government representatives. This being 
done, the Government should meet each Industrial 
Council, inform it of its requirements, arrange dates 
of delivery. To Employers and Employed it should 
say : " Gentlemen, you know what depends upon 
your faithful execution of these contracts. We put 
you upon your honour. If you have any difficulties 
in the matter of raw materials or any disputes of any 
kind which you cannot settle, call us in and we will 
get what you want or act as amicus curicB in any 
disputes. And now, carry on and good afternoon." 
Had this been done at the beginning of the war, our 
output of munitions would have been doubled. But 
there was no statesman with the requisite vision. The 
result was that the Employers were badgered and 
irritated, whilst Labour was antagonised. 

It is, of course, easy to be wise after the event. As 
a fact, the principle of industrial autonomy has grown 
out of the conception of National Guilds, and it was 
only the Guildsmen who had the key to the position. 
Nevertheless, it is not too late to move in this direc- 
tion. The appointment of a Director-General of 



National Service affords the opportunity. This new 
official, as I understand his function, must decide 
what are the essential and non-essential trades, and 
then gradually transfer the labour to the essential 
trades. The entirely practical question arises whether 
this is to be done by the usual blundering bureaucratic 
methods, or whether the industries will be asked to 
organise the new regime in their own way and under 
their own super\dsion. If the former, I tremble to 
think of the friction that must ensue. The latter is 
no easy task, for we may assume that the owners of 
the trades scheduled as " non-essential " will protest. 
But the verdict once reached, joint committees of all 
concerned, employers and employed, will rearrange 
themselves more speedily and smoothly than by the 
ukase of Mr. Neville Chamberlain. 

Another aspect— perhaps it would be correct to term 
it a principle— emerges. We may call it functional 
free-play. We have seen that the permanent hypo- 
thesis Hmits and curbs the free-play of Labour, \'alu- 
ing it as a commodity when it should be elevated into 
a function, a dominant element in wealth production. 
The same restraint operates throughout our poHtical 
and industrial life. Everywhere one looks, there is 
wrong adaptation or stupid handicapping. Technical 
men without family or financial backing play second 
fiddle to men with a " pull " ; the State itself has no 
defined function, perpetuaUy floundering between in- 
dustrial problems and poUtical issues. Our whole 
national life seems to be strugghng through the narrow 
orifice of ParHamentary institutions, so that nothing is 
done thoroughly. Function is subservient to clashing 
interests. A Parliament man, anxious to frustrate 




Church legislation, will talk out an industrial measure 
of first importance ; a Bill to estabhsh the manorial 
rights of the latest landed plutocrat, and having 
priority, may stand in the way of a Bill affecting the 
industrial conditions of a million men ; Irish, Scottish, 
or Welsh necessities may be indefinitely deferred by 
some political finesse, prompted by motives remote 
from the equities of the proposals. In short, the 
mould of our national political and economic life, 
shaped in earlier days when life was comparatively 
simple, must be broken or we shall degenerate. 

To a Guildsman it appears evident that we have 
reached a stag^ when industrial autonomy and func- 
tional freedom must assert themselves in theory and 
practice. To a large extent, although not inevitably, 
the functional free-play is a corollary of industrial 
autonomy. The question naturally arises whether 
these are not properly problems for peace. I reply 
that we have discovered that our fighting strength 
depends upon our economic stability, and that it is 
our business to strengthen our economic foundation 
during every day that war continues. And I reply, 
further, that just as in peace we should prepare for 
war, so in war we should prepare for peace. For it is 
in the midst of a great struggle that we perceive most 
clearly where our strength or our weakness lies. That 
being an indubitable fact, we have exceptional advan- 
tages to prepare the way for more efficient economic 
life and poUtical processes in time of war. Psycholog- 
ically, men are more ready to experiment, to make 
concessions, to adopt new ideas. PoHtically, the old 
shibboleths disappear and new shibboleths have 
neither time nor opportunity to gain currency. Econ- 



omically, we see, as we never saw before, the actual 
anatomy and structure of industry and finance. 
Whilst our men are otherwise occupied, either fighting 
or providing the sinews of war, the cadres of industrial 
organisation, unembarrassed by unemployed or casual 
labour, may be modified in accordance with new 
principles or to meet modern requirements. Is it 
not moral cowardice to postpone the consideration of 
these problems to the less convenient period when 
our soldiers troop back in millions only to find that 
those who stayed at home were intellectually too lazy 
to organise their reception ? Is it not our plain and 
urgent duty " to prepare the way of the Lord " ? 

Truly may we say that in the midst of death we are 
in life ; that in the stress and tumult of war our vision 
of peace is clear and vivid. Never in times of peace 
have we realised how false is the permanent hypo- 
thesis ; nor did we see the true bearing and incidence 
of unemployment ; nor did the urgent need for in- 
dustrial autonomy assert itself so insistently ; nor 
did we understand how vital is functional definition 
and freedom. 

These chapters will not have been written in vain 
if I have successfully stressed certain theoretical and 
practical truths. I have criticised the Tunes' 
" Letters on Reconstruction," and the Garton Memo- 
randum, primarily to pro\^e that they cannot be per- 
manent because their permanent hypothesis is neither 
permanent nor true. At the back of every industrial 
proposal lurks wagery, cruel and wasteful, limiting, 
restraining, and degrading human effort, entangling 
men in bondage. The more I ponder it, the more 
convinced I am that its intellectual rejection and 




practical abolition is the one emancipating movement 
that can demand of us that emotional and spiritual 
energy without which no new era can be approached, 
much less begun. 

The immediate and practical issues already dealt 
with are easily summarised. I have asserted that 
acute unemployment after the war is inevitable. 
The principle of industrial autonomy carries with 
it the care and charge of the unemployed. Now, 
while the war rages, is the time to organise each 
industry so that every man who belongs to it shall of 
right be a partner in it. And, being a partner, he 
shall be entitled to permanent maintenance. No 
longer, even if National Guilds be as yet unrealisable, 
must we allow the profiteers to claim that they have 
the first charge on the assets of any industry in times 
of industrial depression. The Prime Minister talks of 
political partnership with Labour. That is merely 
filling the belly with the east wind. Industrial partner- 
ship comes first. But we can only achieve this partner- 
ship by securing an industrial autonomy which can 
put both profiteer and politician in their proper 

As these two factors sink into their appropriate 
insignificance, and the great business of production 
sets in to redress the balance of war- waste, function, 
which is trained capacity applied to its true pur- 
pose, must assert its dominance in our economy. 
Thirty years ago, I thought that the State was the 
legitimate heir of the great industry. I thought that 
it would come into its own by virtue of its political 
power. In my youthful enthusiasm I failed to see 
that economic power, now as always, can mould the 


State to its own purposes. As the years passed, I saw 
our hopes crystalHse into a vague Labourism that 
finally withered at the touch of economic power strik- 
ing through politics. The permanent hypothesis put 
it to hypnotic sleep. Always the acceptance of the 
commodity theory of labour, expressing itself in a 
thousand subtle ways, was Labour's undoing. The 
baleful influence of that permanent hypothesis reacts 
upon science, literature, art, and religion. We must 
reject it, that Reconstruction may usher in an era of 
real partnership in fruitful production. 


A Lecture on National Guilds 

i8th March 1915 

A TRADITION has endured for several hundred years 
that the mediaeval guilds fostered a passion for liberty 
and resisted oppression. It is not now my purpose to 
argue whether this tradition is founded on fact or 
fiction. I content myself with the observation that a 
tradition that has been handed down from generation 
to generation has probably some solid foundation. 
These guilds were associations of craftsmen and artisans, 
masters and journeymen, to protect their craft and 
trade interests. They gave to the townsman the same 
personal independence that the English yeoman had 
acquired by other means. Obserx^e that both masters 
and journeymen were united in one common purpose. 
It is very important to remember, in this connection, 
that the masters of that period were of a different 
status from the masters of to-day. The coming of 
the "great industry," the concentration of mechanical 
production, and the consequent congestion of popula- 
tion completely changed the relations that formerly 
obtained between masters and journeymen. They 
ceased, in fact, to be masters and journeymen and 



became employers and employees. The employers 
gradually ceased to be " masters," in the Guild sense of 
the word, becoming exploiters ; that is to say, they 
ceased to work at the bench with the journeymen and 
apprentices, as did the " masters," but bought labour, 
at a price, and sold the products of the labour they had 
bought, at a profit. 

In this way, the interests of the exploiters and 
the workers gradually diverged, so that to-day they 
are actually antagonistic. The old-time master has 
developed a different status ; masters and work- 
men are no longer of one class. The actual result 
is that we are now in the throes of a desperate and 
devastating class struggle. There is no longer economic 
harmony. It follows — does it not ? — that if we are to 
revive the Guild spirit and again organise Guilds, on lines 
appropriate to existing industrial conditions, we must 
exclude the exploiters if we are to secure a genuine 
community of interest. 

It is interesting to observ^e that the meaning of the 
word " master " has changed with the changed condi- 
tions. To-day the words master and employer are 
synonymous. Thus, you will see in our daily and 
weekly papers hundreds of advertisements offering for 
sale ail kinds of businesses. If a butcher has saved 
some money, or can get the necessary credit at the 
bank, he may become the master or employer of a 
drapery or grocery or any other business. The nexus 
or bond between him and the employees is purely 
monetary. He may know nothing about the business 
he has purchased, depending upon the skill and honesty 
of an overseer or foreman or manager to bring him in 
a return upon the capital he has invested. This is not 




an unusual incident ; it is very common. For example, 
if I invest £1000 in some joint-stock business, I am 
an employer to the extent of my thousand pounds. 
I may know absolutely nothing about the business, even 
less than the butcher knows about drapery, but I am 
in the master class. 

In the days of the guilds, the word " master " 
carried a very different meaning. While, no doubt, 
he was the medium of employment for the journey- 
man and apprentice, to be a master in those days 
meant "a master of the trade." It signified that he 
had graduated through the various grades, finally 
becoming so proficient that he could undertake 
jobs on his own account, and teach apprentices the 
" craft and mystery," of which he was really (not 
financially or nominally) a master. To-day, we have 
reached the monstrous and paradoxical condition that 
the " masters " of the trades and crafts are the bond- 
servants of the employers. Need I remind you that 
an industrial system, so circumstanced, must be in 
extremely unstable equilibrium ? 

I do not want to inflict upon you an economic lecture. 
Let me, then, try to tell you in simple language how 
this remarkable change has been induced. I have seen 
bills and invoices of mediaeval, and even much later, 
dates, wherein the disbursements for labour were 
separately accounted for. Nor was any profit added 
to the wage payments. The master of those days 
did not regard labour as one of the commodities he was 
selling to the purchaser. He would buy some com- 
modity, leather or iron or bricks or stone, and add to 
their cost a profit based upon his personal service in the 
transaction. Then he would charge for his own labour. 


at a higher rate than that paid to his journeyman, and 
with that he was content. It never occurred to him 
to class human labour in the same category as inani- 
mate commodities. Probably, if he thought about it, 
he would regard such action as impious, because he 
sincerely believed that our bodies were temples of the 
Holy Ghost, and to reduce the work of these temples 
to the level of leather or bricks would have been to 
invite the displeasure of Almighty God. 

I suspect, too, that he would have thought it dis- 
honest to charge more for the labour he had engaged 
than the actual amount paid. But since the advent 
of the great industry, labour and materials have all 
been clumped together in the cost of the finished 
product and a profit added to the sum total. In this 
way, in the course of time, we have gradually been 
taught to believe that labour is one of the various 
commodities that an employer assembles to complete 
some manufactured article. 

Now it is of vital importance that you should grasp 
the true significance of this modem conception of 
labour. You may perhaps say that it does not matter 
so long as you secure a purchasing capacity equal to 
your needs. Believe me, you can make no greater 
mistake. Either you put yourselves, your living 
pulsating personalities, into your work, or your labour 
is an impersonal quality independent of your individ- 
ualities. This latter view is held by your employers. 
They pay you so much money every week, called 
wages, for this impersonal commodity, which they 
call labour. They affirm that, having paid you the 
price of your labour, you have no interest or concern 
in the product of your labour. If, however, your own 


personalities go into the product, then it is obvious that 
the payment of wages is merely a trick to defraud you 
of your property in the finished product. For how 
can your personalities, your individualities, your un- 
measured efforts, your very souls, be calculated in a 

weekly wage ? 

But we need not soar into ethics. Let us confine 
ourselves to the simple fact that so long as you sell 
your labour as a commodity— your right to your 
labour passing with its sale— you can never obtain 
a purchasing capacity equal to your needs. For this 
reason : If your labour be regarded, and dealt with, 
as a commodity, it will obey the law of supply and 
demand, and the price, that is the wage, will fall to the 
lowest competitive level. You cannot therefore secure 
a purchasing capacity equal to your needs, because your 
purchasing power will be reduced to your barest 
necessities. Let me quote from an open letter ad- 
dressed to the Trades Union Congress of 191 3 by The 
New Age. You will find it on p. 289 of a book called 
National Guilds : 

*' A wage is not a salary ; it is not even pay ; nor is it 
remuneration. Salaries and pay and remuneration are 
for individual services rendered. Individuality, the 
human element, enters into these rewards for services 
rendered ; but wage is the market price of a commodity 
called labour. It is an impersonal thing, not human, 
not inhuman, rather non-human. This labour is found 
inside your bodies and in your hands and arms and 
legs and muscles, just as ore is found in the earth or 
fruit on a tree. Being discovered inside you, the men 
who want to exploit it, precisely as they would exploit 



any other commodity, buy it from you as they buy 
ore from landlords or com from farmers. If it be 
scarce, then the price of the labour commodity is high ; 
if it be plentiful, its price is low. In Europe in general, 
and Great Britain in particular, labour is plentiful, 
and, accordingly, it can be bought at a price that 
merely ensures its continuance — that is, at a price that 
enables you to live and to reproduce yourselves, daily 
by food and yearly by children. In its callous dis- 
regard of the sanctities of life, modem capitalism is 
only matched by the slave-owners of previous genera- 

This system, based upon the conception of labour as 
a commodity, is known as the wage-system, or wagery. 
You sometimes hear the phrase ** abolition of the wage- 
system." Fundamentally, it means the rejection of 
the theory — or shall we call it a working hypothesis ? 
— that labour is a commodity. Strong language is not 
necessarily strong argument, but do I overstate the 
truth when I declare that wagery is devilish and in- 
human ? 

You agree with me ? Good ! I should be surj">rised 
if you did not. There were slaves who did not want 
emancipation. They were slaves in spirit as in body. 
If you are wage-slaves in spirit as in body, then I had 
better go home quickly and consider how I can exploit 
you. But I know that beneath your apparent ac- 
quiescence in the wage-system lurks the spirit of 
freedom and not of servitude. If to this spirit of free- 
dom you will add a reasoned determination to end 
wagery, once and for all, then we can proceed with the 



I have remarked that the status of the old-time 
master changed with the coming of the great industry. 
He gradually ceased to be a master of his trade and 
became a master of men. He no longer worked side 
by side with the joumeymen, thinking their thoiaghts 
and speaking their language. He gave up living " over 
the shop " but removed to some respectable suburban 
quarter, where his children took on different habits, 
acquired a different speech, and intermarried with their 
own newly created class. His workmen, who were 
formerly his companions and his intellectual equals, 
worshipping at the same shrine, gradually were segre- 
gated into " working-class districts." In other words, 
whilst the status of the master was raised, the status 
of the workmen was both relatively and actually 
lowered. The master, having now become an em- 
ployer in the modem sense (being able to purchase 
labour as a commodity), had no personal interest m 
the wage-eamers as men and brothers. 

It will hardly be denied, I think, that the creation 
of a wage-slave class has a psychological and social 
relation to these changes of status. If a man is 
foolishly willing to sell his labour as a commodity, 
he cannot be regarded— and rightly cannot— as in 
the same class as a man who (things being as they 
are) wisely insists upon exploiting somebody else. 
Make no mistake about it : to be a wage-earner is not 
honourable but dishonourable. The wage-earner, by 
accepting wages, limits his opportunities for expansion 
and subjects his family to every kind of oppression 
and suppression— economic oppression, social and 
spiritual suppression. We often hear some employer 
say that he was never so happy as when he was a wage- 


earner. It is cant ; hq can always return to the class 
from which he escaped. But he never does. He is 
not such a fool. I suggest to you, then, that your 
objective must be a change of staUis—B, change from 
wagery to partnership in the products of your labour. 
And this change is only possible when you are econom- 
ically strong enough to decline to sell your labour as a 

Before we proceed to discuss how you can success- 
fully resist the pressure put upon you to continue in a 
state of wagery, let me point out that the final dis- 
appearance of a wage-class would mark a gigantic 
stride towards the realisation of a real democracy. The 
poHticians constantly assure you that we are the most 
democratic people in the world. The democracy they 
envisage is the equality of the vote. " One man, one 
vote," they cry. As though that w^as democracy! 
Of course it is nothing of the kind. It is as spurious 
and artificial as is the democracy of America or France. 
The final test of a real democracy is to be found in 
social and industrial life. But we know that the 
candidate's wife who kisses your children at election 
times would never dream of entertaining them or you 
in her own home, even though her husband, Uke you, 
has only one vote. We know that if one of your sons 
wanted to marry one of her daughters, she would revolt 
at the bare suggestion. Why ? Because, although she 
wants your vote, she most assuredly (voicing her 
husband's views) does not contemplate that social 
equality which can only come out of your economic 
equality with her. 

But your poHtical leaders tell you that, since you 
have the vote, you can achieve this equality. I 



am sure you would if you could. The plain truth 
is that you can't. Why? Because our political 
life is in itself insubstantial; it is the reflection of 
that which is substantial, namely, economic power. 
History proves that every liberating movement has 
been first based on the acquisition of economic power. 
Those trade masters of whom I have spoken, first be- 
came powerful in industry, and then broke through into 
the poHtical preserves of the nobihty. It is worth 
remembering that your class helped them. To seek 
economic power through poUtics is to pursue a mirage. 
Seek first industrial power, and political power will be 
added unto you. This is what The New Age writers 
mean when they so constantly assert that economic 
power precedes and dominates poHtical action. They 
cannot reiterate that primary truth too often. 

Now, even if you were reasonably content as a wage- 
class, I should nevertheless want to see your class 
aboHshed, because I believe that a living and unsleep- 
ing people is the hope of the world. Your masters 
want you to be contented, sleek, and well-fed. They 
do not exploit you and oppress you because they hate 
you. Not in the very least. They wish you well. 
Life for them, materially at least, is easy and well- 
ordered. But whilst they are quite willing and, just 
at present, anxious to yield to you many reforms, they 
certainly do not contemplate with equanimity the 
prospect of losing control over your labour power. 
Anything but that ! It is, however, this control over 
your labour that completely nuUifies your efforts to- 
wards achieving a real democracy. Why do I want 
a democracy ? I could easily write a long book in 
giving all my reasons. I wiU now only give two. 



First, because I want the experience of everybody 
in some effective way articulated, so that our national 
life may grow to its full stature. Secondly, because 
the great working mass of our population is the reser- 
voir of our national life. Out of it we draw our genius, 
our thinkers, and our workers. Our present industrial 
system poisons the reservoir and so imperils our 
national safety and future. 

It is curious that the political leaders, who enthusi- 
astically favour and court democracy in politics, reject 
the idea of democracy in industry. They tell us that 
democracy in industr^^ spells anarchy ; that it is the 
negation of discipline ; that we cannot afford the in- 
evitable increase in the cost of wealth production that 
would result from a democratic industry. They con- 
veniently forget that the existing system is the most 
wasteful that can be conceived ; that rent, interest, and 
profits absorb a wickedly disproportionate amount of 
the national dividend ; that commercial competition is 
an economic extravaganza. What is more to the 
point, they quite wrongly assume that discipline and 
economy are repugnant to the democratic idea. 

I do not resent these wTong conceptions, because they 
are too silly to be seriously considered. As a matter of 
fact, the dangers all lie in precisely opposite directions. 
An industrial democracy may become too disciplined ; 
it may become too thrifty and economical (witness the 
Co-operative movement) ; it may even become con- 
servative in its methods. But experience will rectify 
any errors in these directions. Against these dangers 
we may set the certainty that an industrial democracy 
will not only insist upon good work but will know how 
to get it. The best judge of good work and of good 

\ \ 



foremanship is the workman himself. Give him half 
a chance, he makes himself a competent artisan ; give 
him a fair chance, he becomes a craftsman. Even to- 
day (we are Uable to forget this) the work of the nation 
is done by workmen and not by exploiters and capi- 
talists. It is done in the factories and workshops and 
not in offices and counting-houses. 

I need not, however, argue the case from theoretical 
democracy ; the wage-system is so cruel, so wasteful, 
so exhaustmg, that, apart from theory, it must be 
abolished. And now I come to the practical question : 
How can we abolish it ? Please do not think me dog- 
matic and narrow, if I tell you, with all possible 
emphasis, that there is only one way under the sun. 
And that is to acquire the monopoly of your own labour 
power. How can you do that ? By organisation. I 
do not think that I shall offend any Trade Unionists 
who may be here (I trust you all belong to your proper 
Unions) if I affirm that your present methods of 
organisation are inadequate and almost futile. Why, 
you can barely prevent your wages being reduced ! 
You were not strong enough to stop the passage of 
the Insurance Act. When free education was adopted, 
you were not strong enough to prevent a correlative 
decrease in your wages. During the past decade, 
prices have advanced and profits grown to bloated 
dimensions, whilst the purchasing power of your wages 
has actually fallen. I do not doubt that your fatal 
and premature plunge into politics has cost you dearly. 
Your grip upon industry has weakened, and for every 
Labour member you have elected you have lost a 
million sterling annually. 

Without labouring any of these points, it suffices 



to say that you are not yet so strongly organised 
that you can secure a monopoly of your labour 
power. You are often told that your employers, 
adopting the principle of the Roman Emperors, 
divide you and so conquer you. I wish that were 
true. The true truth is that you divide yourselves 
and so remain subject to the wage-system. The 
employers could not divide you if you were really 
determined to be unified. But the Trade Unions are 
exclusive when they ought to be inclusive ; they are 
sectional when they ought to be comprehensive. You 
have, in times by no means remote, had little quarrels 
about the delimitation of work. That was not due 
to the intrigues of the employers ; on the contrary, 
they thought your strikes on these questions a down- 
right nuisance and regarded you as fools. They 
repeatedly said so. And, saving your presence, they 
told the truth. 

The time, then, has come for the Trade Unions to 
reorganise with the view of embracing every worker in 
their several trades. Every clause in their constitution 
that excludes, that limits, must be swept away, as you 
would clear out rotten timber from an old house. 
When the old-time masters drew away from you and 
founded a new class in British Society, the gap between 
you and them was filled by a nondescript class whom 
we now described as "lower-middle class." This 
particular section of our population is a misery to 
itself and a nuisance to everybody else. It is too poor 
to associate with the employing class and too imitative 
of the employers to associate with you. It is like a 
half-breed class in a community of whites and blacks. 
So far as you are concerned it is worse than a nuisance ; 



it is a menace. It is composed of clerks and petty 
tradesmen. It largely supplies the teachers in our 
national schools. It fetches and carries for capitalism. 
Until you open wide your doors and compel it to come 
in, you cannot reckon upon its support and you are 
thus effectually prevented from securing your labour 

To secure that monopoly you must have one strong 
Union or Federation for each of our industries. And 
instead of numbering two and a half million members, 
you must control an army of fifteen millions. Mr. and 
Mrs. Webb and their Fabian coterie assert that this 
is Utopian. It is perfectly feasible. The labour you 
have put into the organisation of your existing Unions 
in the past is far greater, having regard to former diffi- 
culties and disabilities, than is required for your new 
task. I beg you to begin. 

And now suppose that, by waving our wand, this 
task could be accomplished to-morrow morning. 
What then would be the situation ? You would 
certainly have secured a monopoly of your own labour 
power. The next question is how to apply it. You 
have two objects in view. First, by declining to sell 
your labour as a commodity you enter into partner- 
ship, either with the present possessing classes or with 
the State. Your second object is more difficult. 
Remember that in the nature of the case you become 
the predominant partner, for not only does your labour 
monopoly give you power in workshop and factory, 
but political power automatically follows. Your 
second objective, therefore, will be to run the industrial 
machine. The responsibility undoubtedly devolves 
upon you. 




11 ilinitiii. iiiiiMiiiiiiiiiiiiiliriitf 


How will you set about it ? I suggest that know- 
ledge is stili power ; that you will wisely call to 
your aid all the scientific and technical knowledge 
that is now stored up in the minds, books, and 
associations of the scientists and technicians. You 
will want them, and you must make it easy for them 
to live with you. The problem of the technical admin- 
istration of industry is not so simple as of the lower- 
middle class. I have often heard labour advocates 
declare that they could do quite well without our 
administrative and technical men. No doubt you 
could— in time. But why waste time ? And I 
suggest that, whilst your own technical skill was 
being developed, you might make an unholy mess of 
things. No, no ; for Heaven's sake, don't grow cock- 
sure because you have your labour monopoly. That 
way madness lies. And that brings me to my defini- 
tion of National Guilds. A National Guild— again I 
quote from the book I mentioned—" is the combination 
of all the labour of every kind, administrative, executive, 
productive, in any particular industry. It includes 
those who work with their brains and those who con- 
tribute labour power. Administrators, chemists, skilled 
and unskilled labour, clerks— everybody who can 
work— are all entitled to membership. This combina- 
tion clearly means a true labour monopoly." 

I have once or twice mentioned the word *' partner- 
ship." I meant it. There is no alternative between 
wagery and partnership. Either you sell your labour 
power for a mess of pottage, called wages, or you 
insist upon your fair share in the control as well as 
the product of your labour. The first is wagery ; the 
second is partnership. But partnership with whom ? 



A partnership with the present possessors is con- 
ceivable — barely conceivable. You might agree to 
pay them so much annually for a term of years, partly 
for the actual assets you take over, and partly in con- 
sideration of their experience. But you would very 
soon be at hopeless odds with them. The wage- 
system would be gone, and it would be difficult to 
provide a fund for the purpose. You see — do you 
not ? — that it is only by the payment of wages that a 
dividend or profit is procurable. But there is a much 
more serious obstacle to that particular form of partner- 
ship. It would mean the extinction of State power for 
all practical purposes. The State would certainly 
not permit that. Neither would I if I had the power 
to prevent it. 

Anyhow, ultimately your partnership will be with 
the State. On what terms ? Naturally you don't 
want the bureaucrat poking his nose into your 
business. The suggestion is that the State should be 
the trustee in the matter, nominally owning all the 
land, machinery, and other assets, and then chartering 
these assets under guarantees to their suitable Guilds. 
And in exchange for its charter, the Guild must pay to 
the State its proper share of State expenditure. In 
this way we reach a true counterpoise between the 
State and Industry. I hope that you will agree with 
me that, as these National Guilds are of vital concern 
to the community, the community, through the State, 
must be represented adequately upon the executives 
of the Guilds. But I do not want to go into details. 
They are a matter for practical discussion. I want 
only to gain your acceptance of the principles that 
underlie our proposals. 

I - 


Some Affairs of the Spirit 

An Address to the National Guilds League. Annual 
Conference, Sth April 1917 

We have very properly, at this our annual conference, 
concerned ourselves with the practical matters that 
affect our organisation and the purpose which called 
our League into life. It is desirable, as it is inevitable, 
that we should, from time to time, consider our domestic 
arrangements, adapting our action to our means and 
necessities, and seeking a vohmtary discipline com- 
patible with our principles. Nor have we forgotten 
that larger organisation of Society which it is our 
main purpose to achieve. I apprehend, however, 
that none of us is content to contemplate a merely 
mechanical reconstruction. Doubtless there is some- 
thing attractive in Greek symmetry of form, pleasing 
to the eye even if it does not appeal to the spirit. But 
when we have constructed our building, with due regard 
to outline and aspect, there remains the problem of 
the internal arrangements— the furniture, the pictures, 
the colour scheme. We would surely not be at the 
trouble to erect a noble edifice unless we intended to 

discard the stuffy Victorian furniture, substituting for 




it richer appointments, obedient to the demand of a new 
spirit. It may be well, therefore, if we turn aside for 
a short time from our immediate practical problems 
and examine whether, in fact, a new spirit governs our 
activities and informs our motives. 

Whether we are destined to fail or to succeed, it is 
certain that we have set out on no mean adventure. 
To transform Society by abolishing wage servitude— 
a change logically involving the disappearance of the 
existing master-class— is profoundly to change civiUsa- 
tion, if not to create a new civiUsation altogether. But 
such a deep-rooted change can only be possible by the 
extirpation, finally and for ever, of the capitalist spirit 
and tradition. And that, please observe, depends 
not on an outward change in the structure of Society 
but on a change of heart. We must not only reject the 
commodity valuation of labour, the foundation of the 
wage-system ; we must break away from that Capitalist 
ideology around which modern civihsation has crystal- 
lised. " It is evident that unless the fusion of servi- 
tude and class-dictatorship into a common citizenship 
changes our manners, there is no appreciable con- 
version of civilisation, no spiritual advance. A change 
in our manner of thought and action, a change in our 
manner of life, must come out of the economic change 
to which we are pledged, and for which this National 
Guilds League has been constituted. But this spiritual 
change must be reasoned and conscious, and therefore 
we must understand the traditional morahty by which 
Capitalism justifies itself. 

A distinguished member of our League— Mr. W. 
Anderson, of Glasgow University — has recently 
analysed, with characteristic thoroughness, the pre- 


vailing Capitalist ideology. " We are not done with a 
class," he says, " when we have recognised its place 
in the economic system. We have certainly not 
thereby put ourselves in a position to estimate its 
relation to possible social changes." Mr. Anderson 
looks to the social variations in status of institutions 
and customs that express the predominance of the 
economic interests to discover the ideology of the 
period. Inasmuch, however, as there has never been, 
and can never be, a proletarian economic predominance, 
it is not possible to evolve a proletarian ideology! 
Whatever ideals move the wage-earners, as such, must 
have been acquired from the Capitalist environment. 
This, in fact, is the Marxian position ; the nature of a 
class is gauged by the civihsation which it dominates. 
There can therefore be no class ideolog>^ peculiarly 
proletarian, for the proletariat is not really a class but 
a mass of individuals who are not owners of capital, 
who, according to our current moral conceptions, are 
failures. It follows that it is extremely difficult, if not 
impossible, to estimate the character of a civilisation 
based on the economic emancipation of the wage- 
earners, for history yields no clue, whilst in rcspectto 
the other classes " whole epochs are at our disposal." 
At the best, we can only glimpse certain tendencies, 
a nascent revolt against capitalist morality in certain 
limited directions. If we look at the actions and pro- 
fessions of Labour's political leaders, for example, we 
cannot but be struck with their pious devotion to 
middle-class morality. A simple instance, pertinent to 
our own propaganda, is that any and e\ery attempt 
to raise wages is merely an imitation of a Capitalist 
rise in prices ; it is an acceptance of Capitalist morality. 



A movement, however, to change the nature of the 
wage relation would in some degree involve a change 
in CapitaHst ideology. It would therefore seem that, 
at the present stage, the proletariat is negative in the 
ethical sphere just as it is passive in the economic 
sphere. Mr. Anderson says that proletarian ideology 
has yet to be " created." It may be so ; but only to 
disappear in a larger moral conception due to the 
merging of the proletarian class into the community as 

a whole. 

In our search, then, for another code of manners 
built upon new spiritual perceptions, we must look to 
a reaction from the present Capitalist ideology rather 
than to the indefinite tendencies and inarticulate 
revolts of the proletariat. It is precisely at this point 
that we incur our debt to Mr. Anderson, who has 
exposed the true meaning of the CapitaHst ideology. 
He finds that " the great exemplar of the consumer 
and true representative of all consumers is the Capitalist 
himself." At first blush this seems surprising, but on 
reflection I think we must agree that Mr. Anderson is 
right. The true note of Capitalism is not what it 
produces but what it consumes. It carries the pro- 
ductive processes away captive that they may minister 
to the appetites— and the grosser appetites at that. 
" The consumer," he tell us, " is typically the man who 
expects that his wants will be satisfied, and thinks 
that they ought unconditionally to be satisfied, 
because they are his wants. If they are not satisfied, 
he considers he is either being robbed by man or ill- 
used by God." But you cannot be a consumer (over 
and above the minimum requirements necessary to 
continue living) unless you can control production 




either as a Capitalist in possession or unless you have 
a certain purchasing capacity which you derive as 
a Capitalist, or by performing certain services to the 
Capitalist as a member of the salariat. Incidentally, 
at this point, it is worth noting that, on this hypothesis, 
we can only detach the salariat to the extent that we 
transfer its interest in consumption to its more vital 
interest in production. I have not the time now to 
pursue the argument ; but if Mr. Anderson be right, 
as I think he is, the real industrial struggle is not so 
much between Labour and Capital as between Pro- 
duction and Consumption, the Capitalist being the 
consumer's protagonist. Let us briefly consider the 
moral implications. 

Having long since discarded the rehgious theory that 
our only object in this life is to prepare for the next, 
and that to accumulate riches, to live softly, is a 
positive hindrance in our pilgrimage to Heaven, 
Western Europe in general, and Great Britain in 
particular, being convinced that " election " is by 
grace and not by ballot, that the means of grace are by 
faith and not by good works, it occurred to our pious 
ancestors that it would be for the benefit of mankind 
to exploit the world. They reasoned that if they could 
acquire wealth by courage, abstinence, patience, 
pertinacity, honesty, industry, these and kindred 
virtues, plus the tangible result, would at least be a 
sign of grace, even though a just God, moved by 
celestial considerations, might withhold " election " 
and consign to Hell. The Calvinist theology, in 
fact, seems to be the fountain-head of that bourgeois 
morahty by which Capitahsm justifies itself. To 
succeed in this, it was obviously necessary to procure 



labour, it mattered not in what form — slavery or 
wage-serfdom — the moral object being more pleasing 
in the sight of God than any possible injustice or 
hardship inflicted upon the labourer, who, after all, 
would not be a labourer did he but possess the Capitalist 
virtues. In the fullness of time we see the Capitalist, 
as his riches accumulate, concerning himself more with 
the acquisition of power, more with his spending 
capacity, gradually divorced from those very virtues 
he claimed as a sign of grace, and finally sinking into 
a parasitic condition, whilst retaining, by means of 
wagery, control over production. For we must not 
forget that the essential virtues are evolved, not in the 
exploitation of man by man, but of nature by man. 
The main business of Capitahsm to-day is to instil 
these virtues into the proletariat and then to exploit 
them in its own interest. But the virtues by which 
it sets such store are now inherent in Labour as the 
productive factor in Society. 

The moral question that confronts us in this con- 
nection, I think, is this : Are we in revolt against the 
virtues necessary to the struggle wdth Nature, or is it 
against the bourgeois morality that subdues these 
\drtues to its own ends ? 

The answer to the second alternative is clear : 
by abolishing wagery we ham-string the bourgeois 
morality, and that settles it. But the first alternative 
is not so easily disposed of. Every rebel looks wdth 
suspicion not only on the Capitalist result, but with 
equal suspicion upon the virtues, qualities, aptitudes 
— call them w^hat you will — which brought about that 
result. Thus, Mr. Anderson quotes Laf argue to the 
effect that the claim to the right to work is middle 



class and that the proletarian must insist upon the 
right to be idle. I regret that I do not know the 
degree of idleness that would satisfy Laf argue 's 
theory, although I doubt if he himself ever spent an 
idle moment. We all know the story of the Weary 
Willie whose mate extolled the idle life of the Tropics. 
** You lie under a coco-nut tree, and when hungry or 
thirsty you just put out your hand and grab a coco- 
nut," he was told. " I thought there was a catch 
in it somewhere," replied Willie; "you have to put 
out your hand. See?" But Lafargue's contrast 
cuts deep into more than one problem. Assuming, 
as we must, that Capitalism expresses itself in con- 
sumption, and as Labour in its turn expresses itself 
in production, we may expect that once Labour is 
quit of wagery it will produce commodities, not under 
the duress of the consuming Capitalist, but on its 
own terms, and in accordance with its own conception 
of wealth and its own creative instincts. Thus we 
touch a new moral issue for the future Guilds. ** Shall 
we make this thing ? " they will ask. " Then how 
does it affect our lives, not only economically but 
morally ? " In this way we reach the problem posed 
by Ruskin as to what is wealth and what illth. I 
must resist the temptation to pursue this line of 
thought, enticing though it be. I will merely remark 
that I believe the British artisan to be the finest 
craftsman in the world, if he acquires the liberty 
to obey his instincts. He will make good things 
supremely well ; evil things he will reject. Here we 
discover, I think, a future sharp divergence of Guild 
from Capitalist ideology. Not art for the rich or for 
the poor, nor art for art's sake : but the spirit of the 



true and the beautiful entering into our industrial 
life ; production no longer a grinding burden but a 
pleasure, limited only by Nature and our necessities. 

There is an important inference to be drawn from 
the hypothesis that consumption is essentially Capitalist 
in its nature. We use the word loosely, and that robs 
it of any precise definition. Thus it is necessary to 
consume that we may produce. In constructing an 
engine, for example, all the assembled parts have 
first to be produced before they are consumed in the 
engine. It is within our recollection that the free 
traders and tariff reformers wrangled over this point 
and never reached an agreement. But labour, re- 
garded as a commodity, also enters into the construc- 
tion of the engine in the same sense as the other 
commodities. It follows, therefore, that as the 
engineers must ensure a constant supply of engine 
parts, so too they must maintain a constant supply 
of labour. This they accomplish by paying wages 
for the sustenance adequate to the particular quality 
of labour they require. And just as they pay a high 
price for special qualities of material, so too they pay 
a higher wage to obtain the best quality of the labour 
commodity. This, of course, is the kernel of the 
economy of high wages. It is historically true that 
these high wages have largely been secured by trade- 
union organisation, so much so, indeed, that we are 
not wide of the mark in regarding organised labour as 
skilled labour. Nevertheless, Capitalism, recognising 
its economic advantage, has long since accepted the 
principle. But in seeking a definition of Capitalist 
consumption, we properly rule out all the consumptive 
processes prior and necessary to the completion of 




the finished product, whether it be an engine, a 
mansion, a pair of boots, or pate de foic gras. There- 
fore, and this is the inference, the maintenance of 
labour by wages is a productive and not a consumptive 
process. Our critics, I think, overstress the danger 
to the consumer arising out of the Guild control of 
production. But if wage expenditure, in all its 
gradations, be really a charge on production, it follows 
that we get a new conception of consumption as being 
a claim upon or a control of all the finished products 
that are consumed, not by labour (conditionally upon 
its continuing to produce) but by Capital as the 
effective assertion of its economic power. It becomes, 
in short, a wide interpretation of what the lawyers 
call " amenity." When we reach that stage in the 
argument, w^e are brought up with a salutary jerk by 
those ethical considerations to which I have alluded. 
For amenity is obviously a way of living, a varying 
conventional standard of conduct, and therefore 
subject to moral judgment. Capital to-day demands 
of Labour that it shall contribute to the amenities 
of the possessing classes ; Guild principles demand 
quite different canons of conduct, quite other con- 
ceptions of amenity. 

Lafargue's dictum, however, calls for some criticism. 
We not only accept, but welcome and insist upon the 
right to leisure ; the right to develop all those faculties 
not called into play in our industrial occupations, 
the right to social intercourse. An unleisured, over- 
worked democracy is a contradiction in terms. We 
do not seek economic emancipation that we may work 
harder, but that we may w^ork better. And that is only 
possible to a democracy capable of a dignified and 



fruitful leisure. But by what canon of conduct shall 
we secure our right to leisure, to be idle, if so minded ? 
A resort to discipline does not solve the problem : 
for the exercise of discipline evokes as many difhculties 
as it solves. Some new principle must operate ; a 
new relationship must be established between the 
individual and the community, between the individual 
and the Guild. There is nothing socially cohesive in 
discipline ; unless watched with vigilance, it is the 
negation of liberty. The principle we seek must be, 
not the negation, but the complement of liberty. I 
think we shall find it in a new conception of function. 
I apologise for adding another word to our Guild 
terminology, but in reahty it is not new. Sixty years 
ago, Ruskin reahsed that function is the primary 
element in our social and economic life. He applied 
it, in a famous passage, to the five great intellectual 
professions. After defining the functions of these 
professions, he added : " And the duty of all these 
men is, on due occasion, to die for it." A httle remote, 
perhaps, from our immediate question, but neverthe- 
less function and the duty attached to it clearly set 
out without any reservation whatever : faithfulness to 
function even unto death. 

Senor de Maeztu puts function in a modern and 
more philosophic setting. Our claim upon the com- 
munity is not that we are human beings, alive and kick- 
ing ; that is a personal, a subjective, right which he 
rejects. It is only as we are true to our function 
of creating values that we are really citizens. I quote 

a short paragraph : 

" In this need to limit the subjective rights of men 
and of human associations, the functional principle 



will find its main practical support. It is the very 
logic of things, as much as the logic of its theory, which 
will make it triumph. Humanity cannot acknowledge 
in perpetuity and unconditionally either the rights of 
Rockefeller to his millions, or those of the Brazilian 
Government to absolute sovereignty over the immense 
unexploited wealth of the Amazon Valley, or those of 
the Kaiser to set the world on fire. In order that the 
vast mass of men may enjoy security and sufiiciency 
in a limited world, all subjective rights must be made 
subordinate to a right of a superior origin." 

Thus, if Sefior de Maeztu be right. Weary Willie has 
no claim upon the community merely bcause his mother 
bore him ; he must buck up and do something. And 
it also follows that our right to leisure is strictly deter- 
mined by our loyalty to our companions in creating 
social values. Senor de Maeztu regards as the supreme 
values, moral satisfaction, scientific discovery, and 
artistic creation, Man and his associations and insti- 
tutions rank next, whilst the creation of economic 
values, power, wealth, pleasure, are placed on a yet 
lower grade. I will not argue such a large theory here, 
nor must I be taken as accepting it without reserva- 
tion, but it is obvious that the moral issues raised vitally 
relate to the moral problems of a free and untram- 
melled production. They would seem, indeed, to 
complement each other. 

I have endeavoured very briefly to suggest that we 
have developed a body of doctrine already so definite 
as to justify a confident forecast that Guild morality 
must be fundamentally different and distinct from 
that CapitaUst ideology which Mr. Anderson has ruth- 



lessly analysed and exposed. But we must remember 
that intellectual Hfe not only enters into our moral 
conceptions, but is otherwise so infinitely precious that 
we must be very sure that Guild organisation does not 
restrict its freedom. Indeed, that is a negative way of 
stating it. Say rather, we must be very sure that Guild 
life stimulates and enriches our intellectual activities. 

One aspect of Guild organisation excites some fore- 
boding. The centrahsation of the direction of industry 
implied in the Guild Congress must not, even indirectly, 
involve the enslavement of learning, or any kind of 
economic pressure, however unconscious, upon the 
intellectual life. It is becoming a dangerous common- 
place that industry knows no frontiers. CapitaHsm 
knows none, but it by no means follows that our sense 
of locaUty, our local pride, should be killed to obhge 
the profiteers. W^e cannot permit economic centrahsa- 
tion to rob us of the intellectual values arising from 
an informed and alert local hfe. Not only may 
literature suffer in this, but art too in all its phases- 
painting, music, craftsmanship. History as a teacher 
is as misleading as it is subtle ; but one lesson can be 
drawn from it wdth complete assurance that where 
mihtary or rehgious or economic power has become 
centrahsed, intellectual hfe is endangered. Greek 
civilisation never made that mistake, with the result 
that we are thrilled with the story of its several intel- 
lectual centres — Athens, Corinth, Constantinople, 
Alexandria, Carthage. The Roman rulers, impatient 
of diversities in philosophy and religion, sought to 
impose a mechanical unity, beginning with the Council 
of Nicea, wading through the blood of the martyrs, 
and finally ending its first phase in the alhance of 


, 1^ 



Charlemagne with the Pope. The ensuing centraHsa- 
tion destroyed every vestige of intellectual life and 
liberty, science being submerged in superstition. When 
Charlemagne died in 814, every kind of human activity 
was centralised in his Court, every idea, every opinion 
of which he disapproved, was remorselessly destroyed. 
The century succeeding his death is the darkest in the 
annals of Europe, intellectual life, such as it was, being 
only preserved in the free communities under Arabian 
sway, notably the University of Cordova. Even in 
our own times there are men living who can remember 
when Dublin and Edinburgh maintained their own 
unique intellectual independence, now fatally poisoned 
by a combination of Capitalism with an uninformed, 
shallow and irresponsible Press. 

Yet it is certain that, once released from the cursed 
grind of a merciless wagery, men in every centre of the 
country will turn to the intellectual and artistic, as 
tired travellers who have happily reached the wells. 
Let us see to it that it be the constant care of the 
Guilds to develop local life, applying the advantages 
(if advantages they be) of economic centralisation to 
sinking spiritual wells, from which may spring those 
local patriotisms that guard effectually our intellectual 
liberties and substantially add to the content of the 
arts and sciences. 

I end as I began. Ours is a great adventure, a 
crusade fortified with enduring principles, vitally 
necessary to our national health, and assuredly well 
worth our devotion and sacrifice. Let us be humble in 
the knowledge of our blindness to so much that our 
message holds, but very proud of our privilege to pioneer 
the w^ay. 

.-.Willi riwi' K'f 

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